Colorado Airbnb Laws: Statewide and Metro
Airbnb rules in the United States can seem like a labyrinth and Colorado Airbnb laws are no different. The state is one of the world´s go-to destinations thanks to its amazing landscapes, hippied-out culture, and generally laid-back vibe. It’s also home to Denver Nuggets star Nikola Jokić, who has made a name for himself as being perhaps the best non-American player in NBA history. With so much going for it, Colorado has a booming market for both Airbnb guests and people looking to become hosts. If you’re thinking about starting your own Airbnb in Colorado but feel a bit lost with the rules, don’t worry and take a deep breath, here’s a simple guide to help you get started!
Why has Colorado implemented Airbnb regulations?
With iconic destinations like Vail, Aspen, Rocky Mountain National Park, and thriving urban centers, Colorado attracts millions of visitors annually, as it should! The surge in tourism has fueled the growth of short-term rentals, which provides economic benefits and growth prospects for the state. However, the rise in Airbnb properties has also triggered concerns about housing availability, leading to regulatory changes that in some cases are unique to each county and municipality. Not only does each municipality in Colorado have different rules and regulations they also have a different amount of bookings.
Looking to get the best ROI on your AirBnb and understand exactly how to operate your STR?
Below is a breakdown of popular destinations and the current amount of Airbnb listings in Colorado.
Airbnb listings in Colorado by destination
Colorado short-term rental laws
Colorado doesn’t have a uniform statewide law governing short-term rentals. Instead, regulations vary by city and county, but the trends are similar.
Short-term rental definition in Colorado
In Colorado, short-term rentals (STRs) are properties rented for periods of fewer than 30 consecutive days. While this definition aligns with general industry standards, the specifics can vary depending on local jurisdictions. This timeframe typically applies to entire homes and individual rooms listed on platforms like Airbnb. That being said it´s imperative to note that some cities in Colorado add additional qualifications, such as requiring the property to be a host’s primary residence or limiting the total number of rental nights allowed per year.
Owner-occupied vs. non-owner-occupied rentals in Colorado
Owner-occupied vs. non-owner-occupied is a crucial metric that governs many specific counties and municipalities within Colorado.
Owner-Occupied Rentals: Must meet zoning requirements and are typically limited to areas zoned for residential use. The owner must reside in the property for at least 185 days annually.
Non-Owner-Occupied Rentals: Subject to stricter zoning rules, often prohibited in single-family zones and requiring a minimum distance (ie, 500 feet) from other short-term rentals in some jurisdictions.
As many locations in Colorado mandate that an Airbnb must be a primary residence and therefore owner occupied, it is important to take note of this concept. If you are new to Airbnb and want to rent in a place like Denver, you need to be living there as well. That being said, different cities and counties in what is considered metro-Denver (Lakewood, Westminster,) will not have these same regulations.
Permits and licensing for Airbnbs in Colorado.
While no state-level permit or license is required, many cities in Colorado mandate local permits and business registrations. For example, Denver requires Airbnb hosts to obtain a short-term rental license that is valid only for the host’s primary residence, as well as a Lodger’s Tax ID, to comply with tax regulations. In Boulder, hosts must apply for a short-term rental license and prove that the property is their primary residence, along with passing safety inspections.
Short-term rental tax in Colorado
Colorado imposes several taxes on Airbnb and short-term rental income, detailed below.
- State Sales Tax: 2.9% on the total rental income.
- Local Sales Tax: Varies by location (1%–5%).
- County Lodging Tax: Typically 0.9%–2%.
- Local Marketing District Tax: 1.4%–4%.
- Metropolitan District Tax: 0.5%–5.5%.
These taxes often apply to the total booking price, including cleaning fees. In most cases, Airbnb collects and remits taxes on behalf of hosts, but this should always be double-checked before assuming.
Tax deductions for Colorado Airbnb hosts
Hosts can benefit from significant tax deductions under federal law, provided they meet certain conditions, such as renting the property for more than 14 days a year. Common deductible expenses include:
- Cleaning and maintenance costs
- Utilities
- Mortgage interest and property taxes
- Depreciation
- Legal and accounting services
Do everything humanly possible to maximize these deductions as it can be a huge help with maintaining cash flow for your Airbnb and other short-term rentals.
Denver Airbnb laws: Metro and beyond
Colorado particularly metro Denver is comprised of different cities and counties that all have their own AirBnB regulations. Think of it as a patchwork of rules and regulations that in most cases are very similar, but in some cases are very unique unto themselves. A snapshot of regulations in some of the major cities around Denver is as follows:
| City | Key Regulations | Taxes | Additional Notes |
|---|---|---|---|
| Denver | Requires a short-term rental license, valid only for the host’s primary residence. | 4.31% Denver sales tax + state taxes. | Strict penalties for operating without a license. |
| Colorado Springs | Non-owner-occupied rentals are restricted in certain zones and must comply with the 500-foot rule separating rentals. | Local taxes range from 2%–4%. | Hosts must register with the city and pay associated fees. |
| Boulder | Permits only primary residences, requiring proof of residency and compliance with safety standards. | Includes a 7.5% local lodging tax. | Focused on maintaining the integrity of residential neighborhoods. |
| Aurora | Enforces limits on short-term rental permits per neighborhood, with annual renewal requirements. | Combined tax rate exceeding 8%. | Recently introduced regulations to prevent over-saturation of short-term rentals. |
Colorado Airbnb laws and Short term rental laws: Mountains
Colorado is famous for its world-class skiing as well as hippied-out music festivals like the Telluride Bluegrass Festival. Below are some popular mountain destinations in Colorado and their rules and regulations.
| Destination | Key Regulations | Taxes | Additional Notes |
|---|---|---|---|
| Breckenridge | Hosts must obtain a short-term rental (STR) license and comply with a cap on the number of STR licenses issued per neighborhood. | Local lodging tax of 3.4%, in addition to Summit County and state taxes. | Breckenridge enforces strict zoning rules to limit the impact of STRs on housing availability. |
| Aspen | All STRs require a permit, and properties must meet safety and zoning compliance standards. Only one STR permit is allowed per owner. | 7% lodging tax combined with city and state taxes. | Hosts are required to self-report annual revenue to ensure proper tax remittance. |
| Telluride | STRs are permitted in designated zones, but annual caps are in place to limit the total number of short-term rental nights. | 4.5% lodging tax, along with local and state sales taxes. | Owners must submit a compliance report annually to maintain their permit. |
| Vail | All STRs must be registered with the town, and properties must display a valid registration number on all advertisements. | 4% local lodging tax, in addition to Eagle County and state taxes. | Vail monitors STRs through online platforms to ensure compliance with local rules. |
What is the future of Colorado’s short-term rental legislation?
The future of short-term rental (STR) legislation in Colorado is leaning toward stricter local control, increased taxes, and potential statewide regulations to address housing shortages and economic impacts. Cities like Summit County and Boulder are pushing for tighter licensing caps, while statewide discussions include reclassifying STRs for higher property taxes under proposals like HB 24-1299.
While a unified statewide policy has yet to materialize, the momentum is building for standardized safety compliance measures and a centralized permit database, signaling there could be a more regulated future for STRs in Colorado. That being said, regulation has always been the name of the game with business, and as long as you know the legal framework, you are primed to take advantage of Colorado´s ever-increasing tourism, and its title as the best state in the Union.
Want to get a grasp of how to position your STR for up and coming rules an regulations down the road?
How to start an Airbnb in Colorado: By the rules
1. Register Your Business
To legally operate an Airbnb in Colorado, you must register your business with the Colorado Secretary of State. This process can be completed online, and the registration fee ranges from $20 to $50, depending on your business type. If forming a Limited Liability Company (LLC) or corporation, make sure you have a unique business name and an Employer Identification Number (EIN) from the IRS.
How to Register:
- Visit the Colorado Secretary of State’s Business Registration Portal.
- Select “File a New Business Entity” and follow the prompts.
- Pay the filing fee online and retain your registration documents for future reference.
2. Tax Registration
Short-term rental income in Colorado requires a sales tax license. You’ll need to register with the Colorado Department of Revenue to collect and remit state and local sales taxes. The sales tax license is valid for two years, with renewal required upon expiration.
How to Register:
- Access the Colorado Department of Revenue’s Sales Tax License Application.
- Create an account on MyBizColorado and complete the application form.
- Pay the license fee and note your tax account number for reporting purposes.
3. Compliance Check
Before listing your property, confirm it meets local zoning and safety standards. For example, some cities require properties to be in specific zoning districts or adhere to rules like minimum distances between rentals. Safety requirements may include smoke detectors, fire extinguishers, and clear emergency exits.
How to Check Compliance:
- Consult your city or county zoning maps to verify property eligibility.
- Contact your local planning department or search for zoning rules on the official municipal website.
- Review safety requirements outlined in your city’s short-term rental regulations (e.g., Denver Zoning Rules).
4. Licensing
Many Colorado cities require hosts to obtain a short-term rental license which usually includes submitting proof of ownership, safety compliance documentation, and paying a license fee. Specific requirements vary widely, so consult your local government’s website for more deatiled information.
How to Obtain a License:
- Denver: Visit the Denver Short-Term Rental Licensing Portal to apply.
- Aspen: Check the Aspen STR Licensing Requirements.
- Colorado Springs: Review requirements on the Colorado Springs STR Page.
Bottom line: When it comes to Colorado STR rules, don´t cut corners
When it comes to operating an Airbnb or really any business, compliance is a cornerstone. Knowing the insides and outs of the rules and regulations is as important as timing the market to invest in real estate. Colorado is one of the most frequented tourist destinations in the world, and there will always be short-term rental opportunities As long as you know what you are doing, the opportunity is there for the taking, just make sure you are doing everything by the book and have the right people working alongside you.
If you are looking for someone who can manage your short-term rental with intimate knowledge of the market, how to maximize rentals, and how to take advantage of different rules and regulations for your benefit, book a consultation with us.
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FAQ
Can I rent out a second home as an Airbnb in Colorado?
Yes, but it depends on the city. In places like Denver and Boulder, non-owner-occupied rentals are prohibited or heavily restricted, requiring the host to live on-site or use the property as a primary residence. However, in other areas like Vail or Breckenridge, second homes are often allowed as STRs but must comply with local zoning and permitting rules.
Are there restrictions on the number of nights I can rent my property?
Yes, some Colorado cities limit the number of nights a property can be rented annually. For example, Boulder imposes a cap of 120 nights per year for short-term rentals, while Aspen allows year-round rentals but may require additional reporting. Every place is different so it´s important to check.
Do I need additional insurance for my short-term rental in Colorado?
While Airbnb provides host protection insurance, many localities and lenders require additional liability insurance for STRs. It’s recommended to purchase specialized short-term rental insurance to cover gaps, especially for damages or liability claims not included in standard homeowner policies. Providers like Proper Insurance offer policies tailored to Colorado’s STR market.
What happens if I operate an Airbnb without a permit in Colorado?
Operating without a permit can result in severe penalties, including fines, property liens, or forced closure of the rental. Cities like Denver and Colorado Springs actively monitor STR listings and may issue fines of up to $1,000 per day for non-compliance. Make sure you secure all licensing and all your Is are dotted and Ts crossed when it comes to short-term rentals.