Short-term rental owners show up in force to oppose Colorado lawmakers’ plan to tax their homes at a much higher rate
Colorado lawmakers got an earful Tuesday from short-term rental owners on a proposal to classify many of their homes as commercial properties and impose a much higher tax rate.
The legislation would roughly quadruple property taxes for tens of thousands of short-term rental homes in Colorado. It drew fiery testimony from more than 80 speakers at Tuesday’s hearing of the Legislative Oversight Committee Concerning Tax Policy, which voted to advance the bill to the full legislature in January.
The measure would classify homes that are rented for more than 90 days a year on a short-term basis — defined as less than a month per booking — as commercial lodging properties. The property tax assessment rate for lodging properties is 27.9% compared with the 6.765% rate used this year for residential properties.
More than 75 of the speakers voiced ardent opposition to the proposed law, an indication of the political hurdles the measure faces. The change, endorsed recently by Gov. Jared Polis, is meant to place short-term properties on level ground with hotels and motels and generate more money for schools and local districts, which are funded by property tax revenue. Similar proposals to shift short-term rentals over to commercial tax rates have fizzled at the Capitol in recent years under pressure from short-term rental owners.
But the bill comes as Colorado voters are casting ballots on Proposition HH, a 10-year property tax relief plan that taxes second and subsequent homes — many of which are used for short-term rentals — at a higher rate than people’s primary residences.
Proposition HH is seen as a precursor to the classification change proposed under the bill considered Tuesday by the Oversight Committee Concerning Tax Policy. And Polis’ recent support for the idea means it has a real chance of passing in 2024.