The Proposed Bill with a Massive Tax Hike on STRs

You've probably heard of the new bill threatening to raise taxes on Short Term Rentals (STRs).

It does not apply to primary residences.

But it's still worth knowing about as a house hacker.

The bill from the Colorado State Legislature, known as Senate Bill C, addresses the property tax treatment of short-term rental units. Here's a summary of its key points:

1. 1. Definition and Classification: The bill defines a "short-term rental unit" as a property used as a residency but also leased for overnight lodging for less than 30 consecutive days (short-term stays) and not being a primary residence. The classification of such a property for tax purposes depends on its use:

• If leased for short-term stays for more than 90 days in the previous tax year, it is classified as lodging property.

• Otherwise, it is classified as residential real property.

1. 2. Notification and Dispute Resolution: Annually, assessors must notify owners of short-term rental units of the number of days their property was leased for short-term stays. Owners can agree with or dispute this figure, providing evidence if there's a discrepancy.

1. 3. Statewide Database and Reporting System: The property tax administrator is tasked with establishing a pilot program to develop a statewide database and uniform reporting system to track short-term rental units.

1. 4. Effective Date: The provisions of this bill are set to commence for property tax years starting on or after January 1, 2026. However, the act's implementation is subject to a referendum petition and potential approval in a general election.

Final Thoughts:

This bill has some hurdles to overcome before becoming law. If the bill passes, it will make it much more difficult to run a successful short-term rental. If you already own one, it will drastically increase your tax costs by almost 4x.

What can you do about it?

To Read the bill in its entirety see it here.

I cannot understate the massive impact this bill could have on the short-term rental industry in Colorado. I would urge everyone to reach out to your representatives and let them know how this bill would impact you. Here is a quick and easy way to do that:

Stop Massive Tax Hike on Short Term Rental Hosts