Changing My Residency to STR...What Should I Know?

[Daniel Bedell]

I am in the process of building a STR in the mountains outside of Denver. Between the time I bought the land and started the build the county changed the STR laws, making them much stricter and more expensive. Now the law says that the amount of licenses issued will only equal 5% of the homes in the county, so about 150 total licenses. And of course I can only get a license the build is done, I won't be done for a few more months and the licenses are now gone.

The one caveat to the rule is that is you are renting as owner occupied you are not restricted by the 5% rule. So if I change my residency I think I am good to go and can be a resident in the new county at least until a license becomes available. I was planning on managing and cleaning the property myself at first anyway so being up there a lot like I was a resident isn't really an issue. My wife wouldn't change her residency so I think we should be fine with our kids school and all that. Also currently I have a private loan for the building costs and I could extend it a while, though I would like to eventually get a traditional mortgage which I know then starts make the whole owner occupant thing a higher legal bar, though I'm not exactly sure what the method is for legally determining how much time someone is "living" somewhere. 

What else do I need to know? Do I have to register a car in the new county, is this going to weirdly screw with my taxes or something else that I am not aware of?

[Ben Rhodin]

Hey @Daniel Bedell! First obligatory note, don't take this as legal advice, there are always risks with these types of items, especially if you are involving loans. But in general, as far as counties, and especially the smaller mountain counties, are pretty lax on enforcement, and claiming it as your primary is as easy as putting your mailing address there. The Loan will be the tougher part, as they will scrutinize more to base it as your primary. Say you work in Denver 5 days a week, and your wife tells your lender that she plans to stay there, then they will probably not approve it, as it's not reasonable that you actually plan on using it as your primary.

[John Underwood]

Changing your residency means you must live in the house full time.

[Daniel Bedell]

@Ben Rhodin Thanks for the response. Yeah that was my understanding too. I'm a freelance photographer and writer so was just planning on doing that work at the rental/primary when it isn't rented, staying up there some of the nights when it's not rented, registering my license etc there. From what I have read husband and wife can technically have different residences though I am sure it isn't common and would potentially raise some red flags with the lender and leave the decision up to their discretion. Does all that sound about right to you? Like I said my building loan is a private loan so it may just be best to extend that until I can get a STR license without being owner occupied and by then hopefully the rental will be showing as an income stream to a bank anyway. It's obviously not ideal to be doing be forced to go this route but life often isn't ideal. 

Anything else from your experience in the area to keep in mind? 

[Sarah Kensinger]

My, kudos to you for tackling a sticky situation! I'm not sure how you would change residency within a state, besides changing the address on your license and maybe the address of the car registration. Unless you have some interesting state or county laws, it shouldn't affect taxes because your still within the same state.

[Michael Baum]

Yeah, it doesn't bode well when you start off your STR journey by breaking or skirting local laws.

[Richard Elvin]

@Daniel Bedell From the Gilpin county website: https://gilpincountyorg.sharep...
"Per Gilpin County Zoning Regulations Section 13: A “County Resident” is a Colorado resident who lives in Gilpin County. An individual shall be considered a county resident when at the time the individual applies for or receives services issued by the Community Development Department, the person is living and has established an ongoing presence with the declared, good faith intention of living in Gilpin County for a permanent or indefinite period of time.".

When you move there's a notice requirement of thirty days: https://gilpincountyorg.sharep...
Section 2, (B), (5), (a)  (ii)
I don't know how the county would view it if you and your wife have separate residences, while married without any type of legal separation. 
The fines for a violation of the ordinance starts at $250/day. Section 3, (E), (1)
Just an opinion of some guy on the internet. Nothing should be construed as legal or tax advice, nor construed as useful. :)
Best to you in figuring out a path forward! It sucks that the rules changed mid game.

[Daniel Bedell]

Thank you very much @Richard Elvin that's helpful I hadn't seen that. I mean I will be up there as much as a residence just paying more taxes and fees than a normal resident...so hopefully that helps. I need to just start referring to my self as a real resident who commutes for family and resides for work.  Yes the rules changing mid game really sucks...haha thank you for seeing my pain!