In many Colorado resort towns, the majority of homes in a neighborhood are second homes. Over the past 10+ years, as vacation rentals grew in popularity, so did the debate about taxes and community ambience. Should homes rented out as vacation rentals pay taxes? How do we protect the small community feel, while still encouraging the vacation rental business owners to thrive? Laws were enacted and city regulations documented. Many towns now actively enforce compliance, including Breckenridge, whose legislation is designed to keep it the quaint ski village it’s been known for.
To operate a vacation rental in Breckenridge, you must obtain the proper licenses, follow certain rules, pay annual and biennial fees and collect 11.675% in taxes from your guests. Here’s how it breaks down:
Town of Breckenridge Licensing & Taxes
Accommodation Unit License
Short-term rentals in Breckenridge are defined as rentals less than 30 consecutive days at a time. To comply with local laws, you must get an Accommodation Unit License and pay a yearly fee. The fee ranges from $75 to $175 depending on the number of bedrooms in your home. If you purchase a property that was previously used as a vacation rental, the accommodation license and fee are transferrable, and good until fees are due again the following year.
Breckenridge Sales Tax
You must collect a 2.5% sales tax per transaction that is remitted directly to the town of Breckenridge.
Breckenridge Accommodation Tax
Along with the sales tax, you must collect a 3.4% accommodation tax per transaction. As long as you’re collecting more than $40/month in taxes, you need to file monthly to avoid penalties.
State of Colorado Licensing & Taxes
Sales Tax License
This license is primarily to set up an account for remitting sales taxes to the state and comes in at a meager $8 per year. There’s also a $50 deposit that is refunded to you once you’ve paid at least $50 in sales tax. The license must be renewed every two years.
Colorado Sales Tax
The sales tax is 2.9% per transaction.
Summit County Taxes
The state also collects the following taxes for Summit County (where Breckenridge resides): a 2.75% sales tax (which includes the 0.75% MTS tax, or Mass Transit District tax) and a 0.125% MHA tax (Multi-Jurisdictional Housing Authority tax).
Special Requirements for Single-Family Homes
There is a special set of rules for renters of single-family homes that essentially amounts to: Don’t trash your neighborhood.
There are also special provisions for “chalet homes,” defined as a single family or duplex home that is used as part of a tour package. You must apply for a Class D permit along with remitting a $50 fee.
If you’re thinking of operating a vacation rental in Breckenridge, I hope this information helps you navigate the landscape a little more clearly. Always be sure to verify the rules and regulations for your city or consult a lawyer before making any decisions about your short-term rental.
The information above is intended for informational purposes only; it is not legal advice and should not be relied upon as such. If you need legal advice, you should consult a licensed attorney in your area.
photo credit: Carrie Ansell