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Colorado to tax STRs as commercial properties?
Do you own a vacation rental or STR in Colorado? Your property taxes might be going up if a new plan passes.
The legislative proposal -- which passed a key legislative hurdle yesterday -- would classify short-term rentals rented for more than 90 days per year as commercial property for property tax purposes. The current residential property tax rate is just above 6.7%. Commercial property tax rate is 27.9%. So, you know, that's a bit higher.
I've been suspect of this proposal passing in the past. (See my reaction just a few weeks ago here.) But I may have underestimated the growing support it's garnered. The proposal just passed the Legislative Oversight Committee Concerning Tax Policy and will go to the full legislature in January. In the past, the proposal always died in this committee.
I'm torn on this. Philosophically, it makes sense to me that a full-time Airbnb rental can be seen as a commercial lodging business. On the other hand, the vast majority of people doing STRs are little guys, and there are so many tax loopholes for big business. It seems like we could cut the small guy some slack here. Oh, finally, the investor with one or two properties found a way to get ahead a little bit and now they're going to tax them into oblivion?
Again, this has a ways to go in the legislature, but if you're in Denver or Colorado Springs or, hell, anywhere in Colorado, now might be the time to make your voice heard.