Short term rental owners in Colorado are facing having their property taxes quadrupled under a new property tax proposal.
The legislation, sponsored by Colorado Senator Chris Hansen, a Democrat, would see homes that are rented short-term for more than 90 nights in a year be deemed commercial lodging properties. The proposed bill would see a tax rate of 27.9 percent put on such properties, in comparison to the 6.7 percent residential property rate.
"What we're trying to do is look at the tax equity of the situation," Hansen said, according to a report by CBS News last week. "If a private residence is converted into a lodging property, I believe it's fair to the owner of the bed and breakfast that the property right next door, that's a residential condo, has fair treatment." Newsweek has contacted Hansen for comment via email.
It's fair to say that the proposal, Senate Bill 33, has not gone down well with those who own the estimated 24,100 rental properties in the state. Dozens of people who rent their properties through services like Airbnb or privately gathered outside the state Capitol to oppose Hansen's bill this week, according to Denver 7. Newsweek has contacted Airbnb for comment via email.
"Senate Bill 33 has the potential to significantly raise property taxes for short-term rentals, which could harm homeowners and have broader implications for Colorado's hospitality and tourism sector," said Dana Lubner, a board member of The Colorado Lodging and Resort Alliance (CLARA). "This event serves as a platform for our voices to be heard."
Hansen's fellow Democrat, Representative Shannon Bird, has said it is unfair to place every rental owner into the same category. She has introduced a competing bill that would see applicable property owners in the state be permitted to have one rental property at the regular residential rate in addition to their home in Colorado, and any thereafter taxed at a higher bracket.
"This is how people build wealth and it's a tremendous goal, it's laudable and we need to protect people's ability to do that," she said.
Hansen has pointed out that changes are still going to be made to the bill that mean it will likely effect considerably less properties in Colorado. According to Westword, a Colorado based news site, Hansen has proposed changes that would only change the tax rate for properties that can be federally qualified as commercial and homes that are rented for more than 200 nights per year.
He said this means the changes would therefore not apply to 95 percent of Colorado's short term rentals. Speaking about protests at the state Capitol, he said: "They're rallying everybody around a bill that functionally doesn't exist anymore. That's disappointing."
A spokesperson for CLARA told Newsweek that it is "awaiting amendments from the sponsors and remains eager to engage in a constructive discussion. It's worth noting that we understand amendments are forthcoming, as we have been in touch with Senator Hansen through our government relations representation.
"Should these amendments indeed reflect the changes mentioned, it could signify a significant departure from SB33," the spokesperson continued. "To provide informed feedback, we would need to review the actual language, which we have yet to receive in any form, even as a draft."
Amendments will be introduced during the first committee hearing scheduled for February 20.
Update 2/8/2024 06:30 a.m. ET: This article has been updated with comment from a CLARA spokesperson.
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