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Short-term rental owners in Colorado voice concerns about bill that could increase their taxes

The bill's sponsor, State Sen. Chris Hansen, said the bill will be amended and won't impact most short-term rental owners
colorado capitol
Posted at 5:17 PM, Feb 06, 2024
and last updated 2024-02-07 16:49:30-05

DENVER — A battle is brewing at the Colorado State Capitol over a bill that could increase taxes on some short-term rental properties.

Many Coloradans who own short-term rentals say they worry the bill will negatively impact their livelihoods, including their retirement plans. And they say it could force them to reduce the number of nights their properties are available for consumers.

But the lawmaker who introduced the bill said much of the protest and criticism has been overblown. He said amendments will be added this month to ensure most short-term rentals in Colorado aren’t impacted.

He said the bill is about protecting local services, such as schools and hospitals and ensuring properties, specifically hotels, are paying their fair share in taxes.

On Tuesday morning, dozens of short-term rental owners arrived bright and early at the state capitol to voice concerns about Senate Bill 24-033.

“I don't know much about the legislation process, but it appears that they might have kicked the hornet's nest by proposing this bill,” said Dempsey Andrews, a short-term rental owner in Westcliffe.

Andrews and other short-term rental owners met with lawmakers about the bill, which they described as a threat to their livelihoods.

“I've done a lot of analysis on the bill. It just doesn't make any sense,” said Rich Mason, who has been a short-term rental owner since 2016.

He said he rents his home to help save up money for his retirement.

As currently written, the bill would reclassify homes that are used for short-term rentals for more than 90 days of the year as commercial lodging property.

That means instead of the 6.7% residential property tax they currently pay, the short-term rental owners would see their tax bills quadruple.

They would have to pay the 27.9% commercial rate, the same as hotels and motels.

"We would end up having to significantly delay or postpone or put off our retirement as a result of this bill," Mason said.

Short-term rental owners in Colorado voice concerns about bill that could increase their taxes

Kaitlyn Viehdorfer said even her business, which supplies linens to short-term rentals, would be impacted.

"If this bill passes, the number of short-term rentals that are available for my business to thrive will be drastically decreased and this may push my business out of state," Viehdorfer said.

State Sen. Chris Hansen, D-Denver, the bill’s sponsor, said much of the protest is overblown.

He described some of the rhetoric over the bill as “fear-mongering.”

“It's not trying to hurt the tourism industry. It's not trying to hurt somebody who has one property that they rent out occasionally. This bill won't touch you at all,” Hansen said.

He said it will impact several hotels around the state that have been able to classify themselves as residential properties so they can pay a much lower tax rate. He said that hurts local services like fire, hospital, and school districts that depend on property taxes.

“We were seeing kind of this tax inequity that was starting to emerge because of the current rules and regulations,” Hansen said. “We're really trying to focus in on aligning tax fairness to the services that are required. And that's what I think folks will see as this bill moves forward.”

Hansen plans to amend the bill at a committee hearing later this month.

“We’re going to be bringing forward a number of amendments that will narrow the bill,” Hansen said. “We'll be amending the bill to really align with what the IRS defines as commercial activity. And the IRS says that's anything over 180 days per year. So you'll see several changes to the bill that will really help us align with the federal rules.”

A survey commissioned by Colorado Lodging and Resort Alliance, a short-term rental advocacy organization, said the state would see a $1.36 billion decrease in tourist spending if the number of short-term rentals were reduced.

State Rep. Mike Weissman, a Democrat who represents parts of Adams and Arapahoe County, is sponsoring the bill in the House.

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