Colorado

Guide to Colorado’s Short-Term Rental Regulations

Home to mountains and forests, Colorado has become a haven for tourists wanting to escape into nature. Tourism is thriving with a record-breaking 90 million visitors recorded in 2022. To manage this growth effectively, Colorado lawmakers are introducing and updating short-term rental regulations. Property owners and managers have to stay updated to ensure they’re compliant with state, county, and city laws. In this guide, we’ll give an overview of the rules and discuss the requirements for popular Colorado counties and cities. Disclaimer: Our guide is intended for informational purposes only and doesn’t constitute legal advice. For guidance on specific cases, please consult a property lawyer. 

Short-term rental regulations in Colorado

Colorado State defines a ‘short-term rental’ as a property you advertise and rent to guests for 29 days or less. This definition includes any buildings or portions of buildings you lease to guests, but not hotels. Although the Colorado State government determines what taxes you pay, counties and cities have the authority to license and regulate short-term rentals. They can decide the fine details like eligibility factors, zoning restrictions, and fees. However, local governments in Colorado have limited power over online listing sites like Airbnb and Booking.com. They can only require them to remove your properties from the platform if they’ve suspended or revoked your short-term rental license.

Tax requirements for Colorado short-term rentals

You have to pay income and lodging tax on any short-term rental properties you manage in Colorado State. Any revenue from short-term rental activities counts as income. The US federal government requires you to make quarterly estimated tax payments if you expect to earn over $1000 in a year. In Colorado State, accommodation and lodging are also taxable. You’re responsible for collecting and paying these taxes from guests as the manager or owner. Before you can do this, you have to register with the Colorado Department of Revenue (CDOR) for a sales tax license. You may also need to obtain a license from local authorities. Lodging taxes can be made up of the following:

• Local sales tax
• State sales tax
• City sales tax
• County lodging tax
• Local marketing district tax
• Special district tax

Lodging tax is based on the amount you charge for the property and any services you include in the bill. For example, you could include the cleaning fee or taxi pick-up from the airport. Any refundable amounts—say the damage deposit—aren’t subject to lodging tax. Rates vary according to location and change constantly. It’s best to get the latest ones directly from local government offices to ensure you’re up to date. You can find the tax forms you need to file with the CDOR here. Note that home-rule cities may have different short-term rental regulations to their counties. Always check the most local government sites to ensure you’ve got the right rates.

Popular Colorado locations and their short-term rental regulations

As the short-term rental regulations differ between counties in Colorado, let’s explore the laws for its most visited areas.

Denver City and County

Nestled between two mountain ranges, Denver is ideal for those looking to rent out their home while they’re away on vacation. Denver has prohibitive short-term rental laws. You can only rent your property to guests if it’s your primary residence. What’s more, you can only accept one booking at a time with no overlaps between guests. The county has a strict idea of what counts as a primary residence. You have to prove you spend the majority of your time at the property and all taxes are under that address. Eligible owners and residents are required to apply for a short-term rental and a lodging facility license. Denver County officials can deny your application if you don’t meet their conditions or they feel there’s good cause. Homeowners associations (HOA) also have the power to block members from using their properties as rentals. If your application is successful, you must state your short-term rental license number on any listing sites. You’re also subject to 10.75% lodging taxes and an occupational privilege tax.

Aurora City

Just 15 kilometers from Denver City, Aurora has more relaxed short-term rental regulations. Your property must still be your primary residence but there’s no limit on the days you can take bookings. Residents are responsible for any damage or disturbance caused by their guests.

Summit County

Deep in the heart of the Rocky Mountains, Summit County attracts thousands of skiers and snowboarders every year. The local government has recently introduced zoning laws to help them regulate short-term rentals and accommodate the needs of residents. Properties in the Resort Overlay zones are relatively unrestricted. There are no caps on bookings or the number of rentals allowed. However, if your property is in a Neighborhood Overlay, you can only take 35 bookings per year. There are also caps on the number of rentals per area. Summit County has an interactive map where you can check if your zone is close to the limit. You’re required to get a short-term rental license regardless of the zone. You also have to meet Summit County’s stringent eligibility criteria. License holders must:

• Own the property in question
• Live in Summit County for a minimum of nine months a year
• Work in Summit County for no less than 30 hours a week

Once the country grants the license, it’s valid until September 30th of the following year. If the property changes hands before that time, the new owner must reapply. In response to complaints from residents, Summit County requires guests to abide by Good Neighbor guidelines. You’re responsible for telling your visitors and enforcing these rules. You also have to assign someone to be the point of contact and leave their contact details somewhere visible at the front of the building.

Breckenridge

Like Summit County, the town of Breckenridge has a zoning system. There are four areas with different caps which you can find here. It’s worth noting that Breckenridge aims to reduce the number of short-term rentals operating within the town. Currently, they’re over the desired limits.

Eagle County

Eagle County doesn’t currently require you to have a license to manage short-term rentals in unincorporated areas. However, the local government is in the process of drafting new regulations. Recent announcements suggest Eagle County officials aren’t interested in restricting the number of short-term rentals. Instead, they’re focused on introducing fees to offset the cost of tourists using public services. Many cities within the county including Avon and Eagle already have short-term rental regulations. The proposed changes wouldn’t affect them.

Vail

Home-rule city Vail has tighter restrictions on short-term rentals than unincorporated Summit County. Here are some of the most notable rules:

• Licensing fees are higher if your property doesn’t have 24/7 on-site support — these are currently set at $250 a year.
• Your insurance must cover you for a minimum of $1 million.
• If you have three violations within a year, you’ll receive a three-year suspension.

Beaver Creek

The popular resort area of Beaver Creek regulates short-term rentals more closely than the county. Owners must apply for a license and register their property with the city office. You must also disclose a lot of information about the property and your business such as the number of bedrooms and parking space availability.

El Paso County

Similar to Eagle County, El Paso doesn’t currently regulate unincorporated areas. Officials haven’t got any plans to introduce licensing but recommend the following:

• Keep noise to a minimum
• Drive slowly through residential areas
• Avoid leaving trash outside that might attract dangerous wildlife
• Check for fire restrictions, especially during wildfire season
• Only park in the property’s driveway
• Don’t hold gatherings
• Provide neighbors with your contact details

While El Paso County doesn’t enforce these guidelines, officials still accept complaints from residents if your guests cause issues.

Colorado Springs

Unlike unincorporated areas of El Paso County, the city of Colorado Springs regulates short-term rentals. They also limit the number of secondary residences being used as rental properties. There are two types of permits available in Colorado Springs: owner and non-owner-occupied. You must stay at your address for no less than 185 days to qualify as owner-occupied.

Pitkin County

Millions of visitors come to Pitkin County every year, drawn to world-famous ski resorts such as Aspen and Buttermilk. However, officials have only recently introduced licensing for short-term rentals. Now, Pitkin County has three types of short-term rental licenses based on a percentage of your property’s market value.

• Seasonal licenses (61 to 120 nights) = 0.07%.
• Limited seasonal licenses (21 to 60 nights) = 0.06%
• Limited licenses (20 nights or less) = 0.05%

Pitkin County has also placed restrictions on guest stays. You can only accept bookings for up to 120 days a year and separate parties must stay a minimum of four nights. Officials are currently debating whether to ban short-term rentals in remote areas of Pitkin County over concerns for tourist safety.

Aspen

Aspen has different regulations for short-term rentals to unincorporated areas of Pitkin County. Here are the three types of permit and their requirements:

• Lodging exempt: There’s no annual limit but the permit is only available to managers of lodging and condo-hotel properties.

• Owner-occupied: You can lease to guests for 120 nights a year provided you’re the primary resident and the permit is under your name.

• Classic: These permits are available to both primary and secondary residents but there’s a limit on the total number allowed—with long waiting times for applicants.

Boulder County

After introducing short-term rental licenses in 2021, Boulder County officials now update the laws on a two-year basis. The next review will be around December 2024. Boulder County currently has two types of licenses: short-term rental and vacation rental. You can choose based on the type of property management business you want to run. You’re eligible for a short-term rental license if you’re:

• The primary resident and you intend to lease the property for less than 30 days a year
• A secondary resident who plans to rent out the property for 60 days or less a year with a two-night minimum

You require a vacation rental license if you’re not the primary resident but you lease the property for more than 60 days a year.

Boulder

Gateway to the Rocky Mountains, Boulder gets a lot of visitors. Officials have restricted short-term rental licenses to control the level of tourism. Only the primary resident can lease their property to guests and you have to abide by the city’s occupancy limits.

Upcoming changes to Colorado short-term rental legislature

Colorado lawmakers are drafting a bill that would classify short-term rentals as commercial properties instead of residential ones. If it passes, the residential tax rate will increase from 6.8% to 29%. The bill faces some opposition so it’s unclear whether it’ll go through—although it seems likely. There’s also a proposed bill that would require owners to state whether they intend to use their property as a short-term rental in the following tax year.

Resources

• Colorado news: Tourism industry report
• Colorado State: Department of Tax
• Colorado State: Colorado General Assembly IRS: Basics of estimated taxes for individuals
• Denver: Short-term rentals laws, rules, and regulations
• Aurora: Short term vs long-term rental
• Summit County: STR regulations
• Town of Breckenridge: Short-term rentals
• Eagle County: Short-term rental ordinance
• Vail: Short-term rental ordinance changes
• Beaver Creek: Short-term rental
• El Paso Planning Development: Good neighbor guidelines
• Colorado Springs: Short-term rentals
• Pitkin County: Short-term rentals
• Aspen: Short-term rentals
• Boulder County: Short-term dwelling vacation rental licensing
• Boulder: Rental housing licensing short term
• Colorado Public Radio: Lawmakers postpone hearing on short-term rental tax measure