The sponsors of a bill that would have changed the way short-term rentals are taxed in Colorado voluntarily killed the legislation after lawmakers rejected another measure on the same topic last week. 

House Bill 1299 would have offered an alternative plan to the controversial Senate Bill 33, which would have nearly quadrupled property taxes for thousands of short-term rentals in the state. 

Senate Bill 33, which was introduced first, would have required any short-term rental used for more than 90 days per year to be subject to the same property tax rate as lodging properties instead of residential units. 

House Bill 1299 was introduced in response to that bill and would have allowed homeowners to use their primary and secondary homes as short-term rentals as much as they want and still be taxed under the residential rate. But any additional properties used for those rentals — like third, fourth or fifth homes — would be automatically taxed under the much higher lodging rate.

Colorado’s property tax rate for lodging properties in 2023 was 27.9%. For residential properties, it was set at 6.765%. 

Monday, Rep. Shannon Bird, D-Westminster, who was the prime sponsor of House Bill 1299, asked the House Finance Committee to postpone the bill indefinitely. 

“What might work in Telluride is going to be totally different than what would work in Summit County,” Bird said. “We have to be aware that there are these differences, and I am concerned about a statewide approach.” 

Bird added that the Attorney General’s Office alerted her that the bill could be challenged under the state constitution. 

Bird confirmed last week that she planned to ask the committee to kill the bill after Senate Bill 33 was rejected in its first committee hearing. The sponsor of that bill, Sen. Chris Hansen, D-Denver, attempted to pare it back and instead create a study of the impact of short-term rentals in the state, but even the scaled-back idea didn’t have enough support to pass. Hansen was the only member of the committee to vote in favor of the bill.

Senate Bill 33, which was drafted by an interim committee and introduced on the first day of the session in January, brought wide opposition from AirBnB and VRBO operators. Property owners said the hike in taxes would force them to reduce the number of days they operate short-term rentals or stop them from offering them altogether. Business leaders said that those changes could devastate mountain towns’ tourism economies. 

Though the bills’ demise marks the end of one battle over short-term rentals, it’s likely to continue to play out at the local and state level. Steamboat Springs voters approved a 9% short-term rental tax with the funding to go toward affordable housing in 2022.
Sen. Dylan Roberts, D-Frisco, and House Speaker Julie McCluskie, D-Dillon, introduced a bill that would allow local governments to give tax cuts to certain property owners, including those who offer long-term rentals as opposed to short-term. In March, Gov. Jared Polis signed Senate Bill 2 into law.