Vacation rentals may see stricter regulations in 2017
January 11, 2017
Vacation rentals are on the forefront of towns' and counties' concerns throughout Colorado as services like VRBO and Airbnb have allowed property owners to profit from their units—often without much of a penalty. Grand County and most municipalities here have regulations regarding short-term and vacation rentals, but vacation rental services can make it easy to avoid paying required sales and lodging taxes. Unincorporated Grand County and municipalities within the county may start to see heavier monitoring of these regulations as vacation rentals can create large revenue losses on sales and lodging taxes.
Fraser Town Manager Jeff Durbin said he feels vacation and short-term rentals have grown tremendously in the past few years in the Fraser Valley. Durbin said the town used to have great compliance with owners who rent their units out short-term, but he is not sure they still do. Durbin said he is in the process of reevaluating the town's regulations to find a way to make sure owners have business licenses.
In Fraser, if you rent your house or condo to someone for less than 30 days you owe sales tax. If you sell, lease or rent items within the boundaries of the town, you need to obtain the proper forms to collect sales tax, in addition to a Town of Fraser Business License—vacation rentals by owners included. Fraser collects a lodging tax on nightly rentals, hotels/motels, and bed and breakfasts.
Durbin said he feels the rise in vacation rentals is one of the reasons that the cost of housing is so high in Grand County. He said if there are owners out there who are evading paying sales tax for renting their place it is unfair to those who cannot find long-term housing and to the hotels in the area.
Jean Wolter of Winter Park Real Estate said that with the growth of vacation rentals in last few years the company has tried to be more efficient on educating buyers that they must look into the rules of the town they are buying in regarding vacation rentals. Wolter said many buyers do not realize a lodging tax applies to short-term rentals. She said owners evading sales and lodging taxes could create a huge loss of revenue for towns.
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The Town of Winter Park now sends a letter to new buyers to inform them of the stipulations of vacation rentals. Winter Park Town Manager Drew Nelson said the town sends the letter to those involved in new real estate transactions and new vacation rentals they see coming into the market place.
In Winter Park, if you are renting a condo nightly, or for less than 31-days, you must hold a business license and remit sales tax. Units that are professionally managed by a third party may operate under the property management business license.
For unincorporated parts of Grand County, a short–term rental is defined as the nightly or weekly rental of dwellings, dwelling units, mobile homes rooms or accommodations, (excluding hotels and motels), for less than 30 consecutive days. Units include single-family dwellings, duplexes, multi-family dwellings, townhomes, condos, and time-shares. Grand County zoning regulations require short-term rental registration and owners must pay an annual registration fee.
Those interested in short-term rentals of their property must report the dwelling being rented and complete a Personal Property Declaration with the Assessor's Office, complete a registration form and pay a fee with the Department of Planning and zoning, and purchase a Colorado Sales Tax license through the Department of Revenue.
According to the county website, if you do not register and pay the annual fee for your short-term rental, you are in violation of the Zoning regulations. This violation is a misdemeanor and if convicted can be punished by a fine of $100 or up to ten days in County Jail, and each day in violation will be deemed a separate offense.
The regulations only apply to those collecting funds directly from a guest and the owner is responsible for the collection and remittance of taxes. Collecting and remitting taxes yourself requires a Colorado Sales Tax license.