New bill drafted aims to spike property taxes for Airbnb rentals

Colorado could be cracking down on short-term rentals like Airbnb, ​​​resulting in a significant spike in property taxes. The bill being drafted would hit property owners who rent out their home for 30 days or less in Colorado.

It deals with property tax for short-term rentals. If passed, Air BnB property owners could be classified as commercial property instead of residential property.

This means instead of being taxed 7.2 percent, these property owners would be taxed 29 percent. That’s a 22 percent increase.

“It’s just absurd,” said Brishen Combs, who has been using Airbnb to rent out her home for the past two years.

So, why is this bill being proposed? What’s the motive?

“Since the legislature can’t get rid of Gallagher, we are working to find ways to help communities across Colorado who are being impacted by the amendment,” said State Rep. Daneya Esgar.

Esgar explains it has to do with the Gallagher Amendment.

“When Gallagher was first put into the constitution, I think it was pretty well intentioned to protect property owners,” Esgar said. “However, this is directly negatively impacting fire, school, and library districts in some communities.”

How so? It has to do with the steep decline of property tax rates over the past several decades.

Back in the 80’s, commercial properties were taxed at 29 percent. Whereas, residential properties were taxed at 21 percent. In 2018, residential tax rates are at 7.2 percent. A steep decline.

Esgar explains the decline is due in part to a population boom. Back in 1982, the Gallagher amendment states 55% of property taxes always have to come from non-residential properties. Whereas, 45% of property taxes comes from residential properties.

Over the past several decades, Colorado’s population has skyrocketed from what it was in 1982, resulting in the residential assessment rate dropping.

“With lowered rates, it results in less money to schools, fire districts, and libraries,” she said.

The bill draft is one of eight others in the works to address the same issue.

The Alternatives to the Gallagher Amendment Interim Study Committee is set to vote on the bill October 3.

If it moves forward, testimony won’t begin until January when session resumes.