Colorado lawmakers shot down a plan to tax short-term rentals as commercial real estate, a move that would have quadrupled taxes on such properties.
Senate Bill 33, sponsored by Democrat state Sen. Chris Hansen, would have increased tax revenues for mountain communities where many homes are rented to tourists instead of residents.
In a late-night vote Tuesday, following three hours of testimony, the Senate Finance Committee killed the legislation. The bill failed in a bipartisan vote of 6-to-1. Hansen was the lone vote in support of the legislation.
What did the bill propose?
The bill proposed taxing homes that are rented short-term for more than 90 nights a year as commercial lodging properties. In 2023, commercial properties such as hotels and office buildings were taxed at 27.9 percent, compared to the 6.7 percent for residential properties.
Proponents of the bill maintained the money could help blunt the impact the proliferation of short-term rentals like AirBnbs have had on infrastructure and local services, while also raising funds for school districts.
Short-term rental owners opposed the bill, saying it would hurt tourism in the state and lead to fewer available rentals.
The public hearing was originally slated for February, but it was delayed in the face of vocal opposition from short-term rental owners. The bill was then amended to include provisions designed to win them over. But the changes didn’t work.
What's next for short-term rental regulation?
The growth of short-term rentals is a flashpoint in mountain towns across Colorado. Some residents say the explosion of vacation rentals in recent years is contributing to the lack of affordable housing in resort communities.
There is broad support for measures aimed at mitigating some of the effects of the growth in short-term rentals. Many municipalities including Breckenridge, Crested Butte, Telluride and Aspen, to name a few, have passed various regulations and taxes on the units. Gov. Jared Polis has said he supports taxing short-term rentals as commercial properties.
“I have been conflicted on this bill for a long time,” Democratic state Sen. Janet Buckner said after casting her vote during the committee hearing. “This is such a complex bill and I have to be a ‘no.’”
