NCPA - National Center for Policy Analysis

Colorado Ski Towns Look to Collect Taxes on Rental Homes

August 3, 2011

Some tony Colorado ski towns are cracking down on people who rent out their homes without paying taxes, as local governments keep scouring the tax terrain for hidden revenue.  The hard part is collecting, without spending more on the effort than the revenue it reaps, says the Wall Street Journal.

  • Aspen estimates it is losing $100,000 a year in revenue -- in a budget of about $86 million -- on residents who fail to get a business license and pay taxes when they rent out their houses or condos, according to Don Taylor, Aspen's finance director.
  • City officials have proposed that property owners apply for a permit that would be revoked for noncompliance, such as not offering adequate off-street parking.
  • Breckenridge, where 75 percent of the dwellings are residents' second homes, estimates it also is losing out on $100,000 or more annually on lodging taxes, which go into the town's marketing budget and sales on rental fees, says town manager Tim Gagen.
  • Breckenridge's general-fund budget is $21 million.

Hotels and other lodging establishments in Colorado's ski towns, which pay from 7 percent to 10 percent of their revenue in combined taxes, also are behind the push.

In late June, the Aspen city council voted to move forward on a preliminary plan to track down the vacation rentals that aren't paying taxes.

  • The city's inspection of one vacation-rental website found that about half of the 350 local properties listed lacked business licenses and had failed to pay taxes.
  • The twist is, those homes also were in areas of town not zoned for rental properties to begin with.
  • The city is now considering changing the zoning laws to allow rentals in all neighborhoods as long as owners get a license and pay the taxes.

Source: Ann Zimmerman, "Colorado Ski Towns Scour Slopes for Cold Cash," Wall Street Journal, August 2, 2011.

For text:


Browse more articles on Tax and Spending Issues