Colorado STR Law Changes to Watch in 2026

Property Taxes, Permit Caps, Enforcement, and What Hosts Need to Know

Key Takeaways

•  HB24-1299 reclassifies non-owner-occupied short-term rentals as lodging property for tax purposes starting January 1, 2026. This means higher property tax assessments for investment STRs that are not the owner’s primary or secondary residence.
•  Colorado’s 2026 legislative session concluded on May 13 without passing a statewide STR preemption law. Local governments retain full control over permitting, zoning, and enforcement.
•  Mountain towns are tightening caps aggressively. Breckenridge set a hard limit of 2,200 licenses (down from 3,945), Manitou Springs holds at 2% of residential structures, and Snowmass Village raised permit fees to $400.
•  Colorado Springs launched a Primary Residency Audit Program in early 2025 and banned STR permits on properties with accessory dwelling units built after June 30, 2025.
•  Local governments across Colorado have raised $256.6 million in lodging taxes since 2022, with $76.9 million projected for 2026 alone. Most of this revenue funds housing and infrastructure rather than tourism promotion.

The Biggest Change: Property Tax Reclassification Under HB24-1299

Non-owner-occupied short-term rentals in Colorado now face a fundamentally different property tax classification. HB24-1299, which took effect January 1, 2026, reclassifies STR units that are not the owner’s primary or secondary residence as “lodging property,” a subclass of nonresidential property for assessment purposes.

The practical impact: higher property tax bills. Lodging property is assessed at a higher rate than residential real property in Colorado. According to the Colorado General Assembly’s fiscal analysis, the reclassification applies to any STR unit leased for short-term stays for more than 90 days during the previous property tax year. Properties that were rented fewer than 90 short-term days remain classified as residential.

Owners must now file an annual affidavit with their county assessor by November 15 each year, declaring under penalty of perjury whether the property will continue operating as an STR and whether it serves as the owner’s primary or secondary residence. Failure to file could trigger automatic reclassification.

“This law creates a two-tier system for Colorado STR owners,” notes a Colorado RPM legislative analyst. “Primary-residence hosts are protected. Pure investment properties face a meaningful tax increase that will show up in operating costs.”

For hosts managing properties across multiple Colorado STR markets, the affidavit requirement adds an annual compliance step that did not exist before 2026. Missing the November 15 deadline could cost you the residential classification even if your property qualifies.

Colorado’s 2026 Legislative Session: What Passed and What Failed

Colorado’s 75th General Assembly adjourned on May 13, 2026. Compared to previous sessions that saw aggressive housing bills, this year was quieter on the STR front. The most significant STR-related proposals either stalled or failed outright.

What failed: A statewide preemption law that would have limited local governments’ ability to restrict STR operations did not advance past committee, according to Rent Responsibly’s spring 2026 tracker. HB 1036, which would have authorized counties and municipalities to tax residential properties deemed vacant (with voter approval) and direct the revenue toward affordable housing, also failed after opposition from property rights advocates.

What remains in effect: The core regulatory framework established by HB 20-1093 (2020) and clarified by HB 23-1287 (2023) continues to govern Colorado’s STR landscape. County commissioners can license and regulate STRs, fix fees, and require vacation rental platforms to display permit numbers and remove unlicensed listings. Home-rule municipalities have had this authority since before 2020, with Denver’s 2016 STR ordinance serving as the state’s earliest example.

What this means for hosts: Local control remains the dominant force in Colorado STR regulation. There is no statewide licensing, no uniform safety standard, and no preemption protecting operators from local restrictions. Every market operates under its own rules, which is why understanding your specific city’s STR compliance requirements is critical.

Any legislation from the 2026 session that passed without a safety clause takes effect August 12, 2026.

Mountain Town Permit Caps Are Getting Tighter

The most aggressive regulatory trend in Colorado is happening in mountain resort communities, where housing shortages have put STRs directly in the crosshairs. Several towns have imposed or tightened hard caps on the number of permits they will issue.

Breckenridge adopted a cap of 2,200 STR licenses, down from 3,945 active licensed units that represented 52% of the town’s housing stock. The cap, enacted in 2021, divides the town into four STR zones, each with its own limit. Staff estimates it will take three to five years to reach the target through attrition. Licenses are non-transferable on sale, which means the cap naturally shrinks over time as properties change hands. Federal courts dismissed legal challenges to the cap in 2024, affirming the town’s authority.

Manitou Springs holds at its 2% cap (roughly 56 permits), requires 500-foot separation between STRs, and mandates owner-occupancy for at least 185 days per year. Permits are non-transferable and require Planning Commission approval.

Snowmass Village unified all STR permit expiration dates to April 30 and raised the annual permit fee to $400, effective January 1, 2026. The town has also implemented tiered regulatory requirements based on property type and management model.

The pattern is clear: mountain communities with housing crunches are using permit caps, separation rules, and non-transferability provisions to gradually reduce STR density. If you own or are considering purchasing an investment property in a Colorado mountain town, verify the current cap status and waitlist conditions before committing capital.

Colorado Springs: Audits, ADU Conflicts, and Increased Enforcement

Colorado Springs, the state’s second-largest city, has moved beyond rulemaking into active enforcement. Several changes took effect in 2025 that are reshaping the local STR environment.

Primary Residency Audit Program (February 2025): The city now cross-references STR permit addresses with utility records and tax filings to verify that operators meet the primary residence requirement. Owner-occupied units must be the operator’s primary residence, occupied at least 185 days per year. Violations result in permit revocation.

ADU-STR Conflict Rule (June 30, 2025): Properties with accessory dwelling units built after June 30, 2025, are ineligible for STR permits. This restriction applies to the ADU, the primary structure, and any other structure on the property. Properties that had both a legal ADU and a legal STR permit before the deadline may continue operating under grandfathering provisions.

Enforcement Funding: The City Council approved increased annual STR permit renewal fees to fund dedicated enforcement staff and a third-party compliance monitoring system. The city actively scans listing platforms to identify unpermitted operators.

These changes make Colorado Springs one of the more actively enforced STR markets in the state. For hosts operating in the Pikes Peak region, maintaining compliance with the residency requirement is no longer optional in practice, as it is now actively verified.

For a complete breakdown of Colorado Springs STR regulations, including zoning maps, license applications, and HOA rules for short-term rentals, consult the city’s planning department.

The Lodging Tax Surge: $256.6 Million and Climbing

One of the most significant shifts in Colorado’s STR landscape is not about permits or zoning. It is about money. Local governments across the state have raised an estimated $256.6 million in lodging taxes since 2022, according to a Colorado Sun investigation. In 2026 alone, 39 local governments are expected to collect $76.9 million in new and redirected lodging tax revenue.

The critical detail: virtually none of this money goes to tourism promotion. Instead, it funds affordable housing, childcare, road maintenance, and public safety. This represents a fundamental policy shift in how Colorado communities view visitor-generated revenue. STR operators are increasingly treated as revenue sources for community needs rather than partners in a tourism ecosystem.

Combined tax rates for STR operators vary dramatically across markets:

For operators managing sales tax obligations across multiple properties, the compliance burden continues to grow. Even when platforms like Airbnb collect and remit certain taxes, owners remain legally responsible for verifying correct remittance at every level.

Insurance Requirements: No State Standard, Growing Local Mandates

Colorado has no statewide short-term rental insurance requirement, but local mandates are expanding. The gap between what different cities require creates a patchwork that operators must track carefully.

Denver: Requires $1 million in general liability coverage that specifically covers short-term rental activity.

Colorado Springs: Requires $500,000 in general liability insurance covering STR operations.

Snowmass Village: Requires at least $1 million in liability coverage.

Pueblo, Castle Rock, Woodland Park: No specific STR insurance mandate at the city level, though standard landlord insurance policies may not cover short-term rental claims.

The January 2026 Legislative Council Staff issue brief on STR regulation confirmed that insurance requirements remain entirely local, with no state-level mandate under consideration. Maintaining adequate insurance for short-term rentals remains the host’s responsibility regardless of local requirements.

What to Watch for the Rest of 2026

Several developments could reshape Colorado’s STR landscape before year-end:

August 12, 2026: Any 2026 session legislation without a safety clause takes effect on this date. Monitor the Colorado General Assembly’s published bill summaries for newly effective laws.

November 15, 2026: First annual affidavit deadline under HB24-1299. Every STR owner must declare to their county assessor whether the property will continue operating as an STR and whether it qualifies as a primary or secondary residence. Missing this deadline risks lodging property reclassification.

Local ballot measures: Several Colorado communities may place lodging tax increases on November ballots. The trend of redirecting lodging tax revenue from tourism to housing and infrastructure shows no sign of slowing.

Breckenridge attrition: The town is tracking toward its 2,200-license cap. As existing licenses lapse through property sales (licenses are non-transferable), the competitive dynamics will shift in favor of remaining permit holders.

For hosts who want to stay ahead of changing STR regulations across Colorado, quarterly reviews of your local jurisdiction’s planning department website and attendance at public meetings are the most reliable ways to catch changes before they affect your operations.

How Professional Management Helps You Stay Compliant

The regulatory complexity across Colorado’s 272 municipalities and 64 counties makes DIY compliance increasingly risky. Between annual affidavits, primary residence audits, platform-specific tax remittance requirements, insurance mandates, and permit renewals, the administrative burden grows each year.

Professional vacation rental management tracks regulatory changes across every market where your properties operate, handles tax filing, maintains safety compliance, and ensures your permits stay current. With 24/7 guest support and dedicated compliance monitoring, you stay focused on returns while your management partner handles the red tape.

Want to see how your Colorado property performs in today’s regulatory environment? Get a free earnings estimate and let Hoste show you what professional management looks like.

Frequently Asked Questions

Does Colorado have a statewide short-term rental law?

No. Colorado has no statewide STR licensing, permitting, or regulatory framework. HB 20-1093 (2020) authorized counties to regulate STRs, and HB 23-1287 (2023) clarified definitions. All permitting, zoning, and enforcement decisions happen at the city or county level.

How does HB24-1299 affect my property taxes?

If your STR is not your primary or secondary residence and it was rented for more than 90 short-term days in the previous tax year, it will be reclassified as lodging property starting January 1, 2026. Lodging property is assessed at a higher rate than residential property. You must file an annual affidavit by November 15.

Are Colorado mountain towns banning short-term rentals?

Not outright, but several are aggressively capping permits. Breckenridge limited licenses to 2,200 (down from 3,945). Manitou Springs caps at 2% of residential structures. These caps combined with non-transferable permits mean the number of legal STRs will shrink over time through attrition.

What insurance do I need for a Colorado Airbnb?

It depends on your city. Denver requires $1 million in general liability. Colorado Springs requires $500,000. Many smaller cities have no specific STR insurance mandate, but standard homeowner policies typically exclude short-term rental claims. STR-specific coverage is strongly recommended regardless of local requirements.

Did Colorado pass any STR preemption law in 2026?

No. A proposed statewide preemption law that would have limited local STR restrictions failed during the 2026 legislative session. Local governments retain full authority over STR regulation, in contrast to states like Idaho and Indiana that passed preemption laws in 2026.

How much lodging tax do Colorado STR hosts pay?

Combined rates vary significantly. Denver charges approximately 14.75% (including a 10.75% Lodger’s Tax). Castle Rock totals about 14.1%. Colorado Springs is around 12%. Manitou Springs is approximately 10%. The state sales tax component is 2.9%, with local taxes stacked on top.

What is the Colorado Springs ADU-STR rule?

Effective June 30, 2025, properties with accessory dwelling units are ineligible for STR permits. This applies to the ADU, the primary structure, and any other building on the property. Existing properties with both legal ADUs and STR permits before the deadline are grandfathered.

When is the HB24-1299 affidavit due?

November 15 each year. You must submit a signed affidavit to your county assessor declaring whether your property will continue as an STR and whether it is your primary or secondary residence. The first filing was due November 15, 2024, for the 2025 tax year.

Want help staying compliant across Colorado’s complex STR landscape? Get your free earnings estimate from Hoste and see how professional management keeps you ahead of every regulatory change.