Frisco, Colorado, voters approve vacation rental lodging tax increase

Local lodging taxes on short-term rentals in Frisco, Colorado, will rise by 5 percentage points after voters approved the increase. The new tax rate goes into effect on June 1. The town expects the new tax rate to bring in $1.5 million in additional revenue during 2023, all earmarked for workforce housing.

Frisco joins several other Colorado towns that have increased taxes on vacation rentals. Avon, Crested Butte, Leadville, Ouray, and Telluride all raised or imposed new short-term rental taxes via ballot measure in the November 2021 elections.

Frisco short-term rental operators must collect taxes from guests and file regular lodging tax returns with the town. While Vrbo automatically collects Frisco lodging taxes on behalf of its hosts, Airbnb does not. Hosts are responsible for all taxes not collected for them.

All short-term rentals in Colorado are subject to state and county taxes. Airbnb and Vrbo automatically collect Colorado state tax for their hosts. However, even if a rental marketplace collects lodging taxes, Colorado hosts are still required to register for a state tax license and file regular lodging tax returns. 

Mountain resort communities across Colorado have actively embraced short-term rental regulations over the past several years, largely driven by concerns over affordable housing.

Earlier this year, Summit County — where Frisco is located — approved new rules for vacation rentals, creating two short-term rental overlay zones, with different license types and rules for each. The passage of the new law marked the end of a 90-day moratorium on issuing vacation rental licenses.

Putting a temporary halt to short-term rental applications while they mull over regulations has been a popular strategy for governments in Colorado: Aspen passed a nine-month moratorium in December, while Steamboat has extended its moratorium through the end of June of this year.

Summit County has also taken a novel tack in its efforts to preserve affordable housing for locals. The county, along with the town of Breckenridge, has extended a program that offers cash incentives to property owners to convert short-term rentals into long-term rentals for the local workforce. Through the “Lease to Locals” program, owners can make up to $20,000 in incentives. The pilot program, which began in October 2021, has now been extended through 2022.

New state law gives counties more freedom in spending lodging taxes

A new state law also gives Colorado counties more resources to put to use for locals. Previously, counties were required to spend all lodging tax revenue on tourism marketing and promotion. Now, counties can legally spend up to 90% of that money on affordable housing, child care for local workers, and “enhancing visitors experiences,” — as long as any new taxes or changes in how they’re spent are approved by voters.

The former restriction led many counties to refrain from imposing lodging taxes because they didn’t feel they needed more promotion. And several mountain communities have already long used lodging tax revenue for tourism impact mitigation in addition to marketing and promotion. But now that counties have more freedom in how to use lodging tax revenues, more of them may levy these types of taxes.

MyLodgeTax can automate and simplify short-term rental tax compliance, including registration and filing with state and local tax authorities. For more on short-term rental taxes in Colorado, see our Colorado vacation rental tax guide. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.