From Capitol Connection

Senate Bill 33 came out of the Legislative Oversight Committee Concerning Tax Policy this past fall, previously known as “Bill C.” This legislation is sponsored by Sen. Chris Hansen (SD 31) and Rep. Mike Weissman (HD 36). This measure, if passed, would reclassify how short-term rentals are taxed for property tax years starting on January 1, 2026. Short-term rentals (STRs) are defined as stays that are less than 30 consecutive days; any stays that are longer than 30 consecutive days are considered long-term rentals and will remain classified as residential property. SB 33 specifies that if a STR is leased for short-term stays for more than 90 nights and is not a primary residence, it will be assessed at a higher rate and classified as lodging property.

Currently, short-term rentals are taxed at the residential rate of 6.7%, and this proposed legislation would change the tax rate from 6.7% to 27.9%. This bill will require assessors to notify STR owners of the number of days during the prior property tax year that determined the property was used as a short-term stay. The owner can dispute the number of days specified by the assessor but will be required to prove that the STR was leased for a different number of days for short-term stays. SB 33 will also create a pilot program established by the property tax administrator to develop a statewide database and reporting system to track STR units.

SB 33 is currently scheduled for the Senate Finance Committee on February 13, starting at 2 pm. CAR is opposed to Senate Bill 33 as introduced as it would quadruple the property tax rate for a number of property owners who use their properties as short-term rentals. It would also redefine a residential property as a commercial property, creating a dangerous precedent and lending challenges. Setting an arbitrary line of 90 nights could have a detrimental impact on tourism and local communities.

The Colorado Association of REALTORS® (CAR) have also been engaged on a strategic counterproposal that would exempt primary and secondary residences from being classified as lodging regardless if used as an STR and therefore, both residences would not be taxed at the higher 27.9% rate.