Colorado Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Colorado?

Short-term rental (STR) regulations in Colorado vary by county and city, with rules typically found in zoning codes, planning codes, and local ordinances. While there are no statewide regulations, most jurisdictions require STR owners to obtain a license or permit, hold a business license, pay taxes, comply with zoning regulations, provide life safety equipment, properly dispose of trash, and adhere to maximum occupancy rules.

Starting a Short-Term Rental Business in Colorado

To start an STR business in Colorado, property owners generally need to submit documents proving ownership, provide emergency contact information, and demonstrate compliance with relevant health, fire, safety, maximum occupancy, parking, and trash collection ordinances when applying for a license or permit.

For example, in the City and County of Denver, STRs are only allowed in the owner's primary residence and a person can have only one primary residence. Denver also requires the license applicant to provide a valid Colorado driver's license or state ID and at least two other documents to demonstrate primary residency.

In Colorado Springs, there are two types of STRs - owner-occupied (where the owner lives at the property for at least 185 days per year) and non-owner occupied. Non-owner occupied STRs are not permitted in single-family zoning districts and must be located at least 500 feet from one another in other zoning districts.

Boulder County requires a local license to operate any STR in unincorporated areas. There are two license types - Short-Term Rental License for primary residences rented while the owner is present (with an exception of up to 45 nights per year), and Vacation Rental License for single-family dwellings rented without the owner present. The number of Vacation Rental Licenses is capped in certain geographic areas of the county.

Failure to obtain necessary licenses and permits or comply with local regulations can result in fines, suspensions, and revocations. Some Colorado residents have even sued to stop STR ordinances they claim are too restrictive and violate property rights.

As local STR regulations continue to evolve, it's important for property owners to stay informed. Online forums like BiggerPockets feature discussions on the current state of STRs in Colorado, with some wondering if increasing regulations spell the end of STRs as they've known them. However, by carefully researching requirements, working with local authorities, and adapting to any rule changes, STR businesses can still thrive in Colorado's in-demand destinations.

Short-Term Rental Licensing Requirement in Colorado

While there are no statewide short-term rental licensing requirements in Colorado, many counties and cities have their own regulations. STR owners generally need to obtain a license or permit from their local jurisdiction, which may require submitting various documents and paying fees.

For example, in the City of Golden, two types of STR licenses are available depending on the property's zoning:

• Short Term Rental License (residential zoning districts): The dwelling must be occupied by the owner for at least 10 months per year.
• Tourist Home License (commercial zoning districts): The property does not need to be the owner's primary residence.
• Golden's STR license application requires proof of ownership, primary residence (if applicable), fire/hazard/liability insurance, a signed life and safety certification form, and a short-term rental affidavit. The license costs $200 for two years.

In Boulder County, a local license is required to operate any STR in unincorporated areas. There are two license types:

1. Short-Term Rental License: For primary residences rented while the owner is present (with an exception of up to 45 nights per year). Allowed in all zone districts.
2. Vacation Rental License: For single-family dwellings rented without the owner present. Limited to certain zone districts, with caps on the number of licenses per geographic area.

Failure to obtain the necessary licenses can result in fines and penalties. For instance, operating an unlicensed STR in Denver can lead to fines of $150 to $999 per incident and potential additional court costs.

The licensing process time varies by jurisdiction but generally takes a few weeks to a couple of months. Fees also differ but are typically a few hundred dollars per year.

To apply for an STR license, owners usually need to submit an application to their local city or county planning/permitting department, either online, by mail, or in person. Required documents often include:

1. Proof of ownership/deed
2. Proof of primary residence (driver's license, voter registration, etc.)
3. Parking plan
4. Proof of insurance
5. Signed affidavits and self-certification forms
6. Floor plans
7. Sales tax license

Some jurisdictions like Buena Vista also require properties to pass a fire inspection within 60 days of receiving conditional license approval.

As STR regulations can vary significantly by location and change over time, it's crucial for owners to carefully review their local requirements before applying for a license. Consulting with local authorities and joining online forums to learn about others' experiences can also help navigate the licensing process.

Required Documents for Colorado Short-Term Rentals

While specific requirements vary by jurisdiction, here are the common documents needed to apply for a short-term rental (STR) license in Colorado:

1. Proof of ownership: Provide a recorded warranty deed, tax bill, or other legal document proving ownership of the property. This establishes your right to use the property as an STR.
2. Proof of primary residence: For STRs in residential zones, you may need to prove the property is your primary residence by providing documents like a driver's license, state ID card, voter registration, vehicle registration, tax returns, or utility bills showing the address. The exact documents required vary by city/county.
3. Sales tax license: Obtain a sales tax license from the local finance/revenue department to collect and remit sales and lodging taxes. Some jurisdictions like Denver also require a lodger's tax account number.
4. Parking plan: Some cities like Arvada require indicating that one additional off-street parking space is provided, unless applying for a full house rental.
5. Floor plan/site plan: Certain applications ask for a floor plan and/or site plan of the STR to verify compliance with zoning and occupancy limits.
6. Proof of insurance: You may need to submit proof of property and liability insurance coverage, typically at least $500,000 to $1 million. Some cities allow proof that the hosting platform (like Airbnb) provides equal or greater coverage.
7. Life-safety affidavit: Many jurisdictions require a signed affidavit certifying the STR is equipped with working smoke detectors, carbon monoxide detectors, and fire extinguishers that meet regulations.
8. Local contact information: Provide a local contact (either the owner or a designated agent) who can respond to issues at the property 24/7. Some applications require notarized statements from the contact.
9. Application fee: Pay the STR license application fee, which ranges from around $100-$200 depending on location. This is often paid online or via check.
10. Other affidavits/certifications: Read the application carefully and sign any other required affidavits or certifications, such as agreeing to occupancy limits, trash collection rules, noise ordinances, etc.

To apply, gather all required documents and submit them together with the STR license application, either online via the city/county's permitting portal, or in-person/by-mail to the relevant zoning, planning, or finance department. Refer to your local city/county website for specific instructions, as the process varies across Colorado.

Colorado Short-Term Rental Taxes

Short-term rental (STR) owners in Colorado are required to collect and remit various taxes, which can vary by city and county. Here's a breakdown of the main taxes that apply to STRs in the state:

Colorado Sales Tax: The state sales tax rate is 2.9% of the listing price, including any cleaning fees, for reservations of 29 nights or shorter.

Local Sales Tax: The local sales tax rate varies by city and county, typically ranging from 1% to 5% of the listing price, including any cleaning fees, for reservations of 29 nights or shorter.

County Lodging Tax: Many counties in Colorado charge a lodging tax, which can range from 0.9% to 2% of the listing price.

Local Marketing District Tax: Some areas have a local marketing district tax, which can range from 1.4% to 4% of the listing price.

Metropolitan District Tax: Certain metropolitan districts charge an additional tax, typically ranging from 0.5% to 5.5% of the listing price, including any cleaning fees, for reservations of 29 nights or shorter.

City Lodging/Accommodations Tax: Many cities in Colorado charge a lodging or accommodations tax. For example, Denver has a lodger's tax of 10.75% of the listing price, including any cleaning fees and guest fees, for the first 29 nights of any reservation.

It's important to note that tax rates can vary significantly by location. For example, in Aspen, the aggregate tax obligation for a nightly stay in a short-term rental investment or second homeowner "classic" permitted property is 21.30%, while a stay in an owner-occupied or lodge-exempt property is taxed at 16.30%.

Tax Deductions for Short-Term Rentals

STR owners in Colorado can deduct many business-related expenses from their taxable income to reduce their tax liability. Some eligible deductions include:

1. Cleaning, accounting, legal, and other business services
2. Depreciation
3. Home office expenses
4. Maintenance costs
5. Mortgage insurance premiums
6. Mortgage interest
7. Property taxes
8. Repairs
9. Supplies
10. Utilities

To ensure compliance with all applicable taxes and to maximize deductions, it's advisable for STR owners to consult with a tax professional familiar with the specific requirements in their city and county.

Does Colorado Strictly Enforce STR Rules?

Colorado has a reputation for being relatively Airbnb-friendly compared to some other states, but enforcement of short-term rental (STR) regulations varies significantly by city and county. While there are no statewide rules, many local jurisdictions have adopted strict ordinances in recent years to combat housing shortages and preserve neighborhood character.

According to discussions on forums like BiggerPockets and Reddit, Colorado STR hosts have mixed experiences with enforcement. In tourist hotspots like Denver and mountain resort towns, authorities are cracking down on unlicensed rentals and those violating zoning restrictions or primary residence requirements.

Denver, in particular, has ramped up enforcement efforts, with the city filing a lawsuit against an STR management company in 2022 for operating unlicensed properties. The city also regularly conducts audits and issues fines for non-compliance. However, some hosts on Reddit claim they've operated under the radar in Denver for years without issues.

Smaller towns and rural areas tend to have more lax enforcement, but this is changing as STRs proliferate. For example, Steamboat Springs hired a third-party company in 2022 to help identify illegal STRs and ensure compliance with the city's rules.

Despite the risks, many hosts continue to operate STRs in Colorado without obtaining proper licenses or following all the rules, especially in mountain towns with high demand and limited lodging options. However, the consequences of getting caught are becoming more severe, with fines up to $1,000 per violation in some jurisdictions.

Overall, while Colorado is more welcoming to STRs than states like New York or Hawaii, the regulatory landscape is becoming increasingly restrictive. Hosts who carefully research and comply with local rules are less likely to face enforcement issues, but those operating illegally are taking a significant risk, particularly in larger cities and popular tourist destinations.

How to Start a Short-Term Rental Business in Colorado

Starting a short-term rental (STR) business in Colorado requires careful planning and compliance with local regulations. Here's a step-by-step guide to help you get started:

Research local regulations: Thoroughly review your city and county's STR ordinances, zoning restrictions, and licensing requirements. Understand any occupancy limits, parking rules, safety standards, and other guidelines you must follow.

Choose a property: Select a property that complies with local STR regulations and has strong potential for bookings. Consider factors like location, amenities, size, and target audience. If purchasing a new property, work with a real estate agent familiar with STR rules in the area.

Register your business: Choose a business structure (sole proprietorship, LLC, etc.) and register your STR business with the Colorado Secretary of State. Obtain a federal Employer Identification Number (EIN) for tax purposes.

Obtain necessary licenses and permits: Apply for a sales tax license and any required STR licenses or permits from your city/county. Gather all necessary documents, such as proof of ownership and primary residence, parking plan, and proof of insurance. Pay any application fees and wait for approval.

Set up your rental space: Furnish and decorate your STR to make it appealing to guests. Invest in quality furniture, linens, and amenities. Ensure the space is clean, safe, and well-maintained. Consider hiring a professional photographer to take high-quality listing photos.

Create a listing: Choose an STR platform like Airbnb or Vrbo and create a compelling listing. Write an accurate, detailed description of your space and its amenities. Use the professional photos you took to showcase your rental. Set a competitive nightly rate based on similar listings in your area.

Automate your business: Use STR management software like Guesty, Hostfully, or Lodgify to automate tasks like booking management, communication with guests, and cleaning scheduling. Set up a system for providing check-in instructions, house rules, and local recommendations to guests.

Manage bookings and guests: Respond promptly to booking inquiries and guest questions. Provide excellent customer service to encourage positive reviews and repeat business. Regularly check in with guests to ensure they have a pleasant stay.

Comply with ongoing regulations: Stay up-to-date with any changes to local STR regulations and renew your licenses as required. Collect and remit all applicable taxes (sales tax, lodging tax, etc.) to the proper authorities. Maintain accurate records of your bookings and expenses.

Optimize and grow your business: Monitor your booking performance and adjust your nightly rates based on demand. Continuously improve your listing and rental space based on guest feedback. Consider expanding to additional properties or hiring a property manager as your business grows.

Some tips for success:

1. Join local STR host groups on Facebook or BiggerPockets to connect with other hosts and stay informed about regulatory changes.
2. Provide exceptional customer service to guests to earn positive reviews and increase bookings.
3. Be proactive about maintaining your property to avoid issues and complaints.
4. Consider offering special amenities or experiences to differentiate your listing from competitors.
5. Regularly analyze your financial performance and adjust your strategy as needed to maximize profitability.

By following these steps and continually adapting to the evolving STR landscape in Colorado, you can build a successful and compliant short-term rental business.

Who to Contact in Colorado about Short-Term Rental Regulations and Zoning?

For questions about short-term rental regulations and zoning in Colorado, it's best to contact your local city or county planning department. Here are some key contacts for major Colorado destinations:

Denver: Contact the Department of Excise and Licenses at 720-913-1311 for questions about STR licensing and regulations.

Colorado Springs: Call the Planning & Development Department at 719-385-5905 for zoning and permitting questions.

Boulder: Contact the Planning & Development Services Center at 303-441-1880 for information on STR rules and licensing.

Breckenridge: Email the Finance Department or call 970-547-3122 for questions about STR licenses and taxes.

Steamboat Springs: Call the Planning & Community Development Department at 970-871-8258 for zoning and licensing inquiries.

Douglas County: Contact Zoning Compliance staff at 303-660-7460 for information on STR licenses in unincorporated areas.

In addition to local authorities, Colorado hosts may find it helpful to connect with other hosts and stay informed about regulatory changes through online communities. Some useful resources include:

1. Airbnb's Colorado Host Club: Join the local Host Club Facebook group to connect with other Airbnb hosts in your area, exchange tips, and get updates from Airbnb.
2. BiggerPockets Colorado STR Forum: Engage with other Colorado STR investors on BiggerPockets to discuss market trends, regulations, and investment strategies.
3. Colorado Short-Term Rental Alliance (CSTRA): CSTRA is a non-profit trade association representing vacation rental homeowners, managers, and supporters in Colorado. Their website provides regulatory updates and resources for hosts.
4. Colorado Hotel & Lodging Association (CHLA): While primarily focused on traditional lodging, CHLA also provides some information and advocacy related to STRs in Colorado.

By staying in touch with local authorities and participating in host communities, STR owners and managers can navigate the evolving regulatory landscape in Colorado and ensure compliance with all applicable rules.

What Do Airbnb Hosts in Colorado on Reddit and Bigger Pockets Think about Local Regulations?

Colorado Airbnb hosts have mixed feelings about local short-term rental (STR) regulations, according to discussions on Reddit and BiggerPockets. While some appreciate the clarity and reduced competition that comes with stricter rules, others find the requirements burdensome or feel their property rights are being infringed upon. Here are some real-life experiences and stories from Colorado hosts:

Denver's Primary Residence Requirement: In a Reddit thread, Denver hosts discuss the city's requirement that STRs be operated out of the owner's primary residence. Some question how so many "primary residences" can be rented out full-time, with one host reporting a non-compliant property in their neighborhood. Others explain the rules still allow for hosts to rent out a portion of their home or their entire home while traveling.

Positive Experience with Denver Licensing: A Denver host shared their mostly positive experience with the city's STR licensing process on Reddit, noting that while there was some red tape, it wasn't a massive burden for hosts operating out of their primary residence. They acknowledge the rules have reduced competition from full-time investor-owned STRs.

Woodland Park Lawsuit: As reported on Planetizen, a group of Woodland Park residents are suing the city over an ordinance restricting non-owner-occupied STRs to commercial zones only. The plaintiffs claim the rule violates their property rights and will force them to sell their STR properties.

Strict Enforcement in Denver: In a BiggerPockets thread, a host with experience managing over 100 listings in Denver warns that the city is "insanely strict" about enforcing STR regulations, advising others to research the rules carefully.

Gunnison County Regulations: A prospective investor on BiggerPockets asked about STR success in the Crested Butte and Gunnison area, noting that their due diligence showed the specific property was in an area without nightly rental restrictions.

These experiences suggest that Colorado hosts must navigate a patchwork of local regulations that can vary significantly by city and county. While some appreciate the regulatory clarity and reduction in full-time STRs, others find the rules overly burdensome or restrictive. As local governments continue to grapple with the impacts of STRs on housing affordability and neighborhood character, hosts will need to stay informed and adapt to evolving regulations.

Disclaimer: While we here at BNBCalc strive to keep all of our regulation guides updated and accurate with all the latest local laws, we still do not suggest using them as your sole or primary source for local regulations. We also do not recommend you rely on the third-party sources we link to or reference, and we are not responsible for any of the information on these third-party sites. These guides are for entertainment purposes only and only provide basic information and should not be considered as legal advice.

We highly recommend directly contacting the responsible parties for each area and hearing what their officials have to say. Ultimately, it's your responsibility as an investor to ensure you fully comply with the local laws, and it's best to speak with professionals before making an investment decision.