Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified Colorado tax professional before filing.
Colorado · USA · Short-term rental taxes
Short-Term Rental Taxes in Colorado
STR income in Colorado is subject to federal income tax (Schedule E or C), Colorado's 4.40% flat state income tax, and a layered stack of state and local sales, lodging, and marketing-district taxes on each booking.
The 30-Second Answer
- Federal income tax: report STR income on Schedule E (passive rental) or Schedule C (active hosting with services); the 14-Day Rule exempts income if you rent 14 days or fewer per year.
- Colorado state income tax: file Form DR 0104 at a flat 4.40% rate; nonresidents add Form DR 0104PN to isolate Colorado-sourced income.
- Sales & lodging taxes on bookings: Colorado imposes a 2.9% state sales tax on stays ≤29 nights, plus county lodging tax (~0.9–2%), local marketing district tax (~1.4–4%), and local city/county sales tax (~1–5%) — totals vary widely by location.
- Sales tax license required: STR operators must register with the Colorado Department of Revenue for a sales tax license before the first booking, even if platforms like Airbnb collect and remit taxes on your behalf.
Deductions
Deductible Expenses for Colorado STR Hosts
Allowable deductions reduce your taxable net rental income at both the federal and Colorado state level — keep receipts for everything.
Mixed-use properties (personal + rental use) require pro-rating expenses by rental days ÷ total days used. Colorado follows federal treatment for deductible expenses on Schedule E or C.
Filing Calendar
Key Dates & Filing Calendar
Colorado STR hosts face both federal and state income-tax deadlines, plus ongoing sales-tax filing obligations tied to booking volume.
Register for a Colorado sales tax license with the Department of Revenue before accepting your first booking — penalties start at $50 plus interest for late or missing filings.
Colorado Department of Revenue, DR 0104 instructions and Sales Tax License requirements (2024); madrasaccountancy.com Colorado Rental Property Filing Requirements (2026).
Income Tax Treatment
Schedule E vs. Schedule C: Which Applies to Your Colorado STR?
The IRS — and by extension Colorado — taxes STR income differently depending on how actively you manage the property and what services you provide to guests.
Schedule E — Passive Rental
Standard rental income reporting for most hosts
- Report gross rents and deduct allowable expenses (mortgage interest, depreciation, repairs, management fees, etc.).
- Net losses may be limited by passive-activity rules unless you qualify as a real estate professional.
- Self-employment tax does NOT apply to Schedule E income.
- Colorado taxes the net Schedule E income at the flat 4.40% rate on Form DR 0104.
No income ceiling
Schedule C — Active Business
For hosts providing substantial services to guests
- Income is treated as self-employment income — subject to 15.3% self-employment tax on net profit.
- Broader business deductions may be available, including home-office deduction if applicable.
- Losses are generally not subject to passive-activity limitations, offering more flexibility.
- Colorado taxes Schedule C net profit at the same 4.40% flat rate on Form DR 0104.
No income ceiling
Depreciation
Depreciation for Colorado STR Properties
The IRS allows residential rental property to be depreciated over 27.5 years using the straight-line method — a non-cash deduction that reduces taxable income each year.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Residential rental structure | 27.5 years | Straight-line depreciation; land value excluded from depreciable basis. |
| Appliances & furniture | 5 years | Personal property used in rental; may qualify for bonus depreciation or Section 179 expensing. |
| Carpeting & flooring | 5 years | Classified as personal property if easily removed; otherwise 27.5 years as structural component. |
| Land improvements (fencing, landscaping) | 15 years | Straight-line; does not include the land itself. |
A cost segregation study can accelerate depreciation on certain components. Colorado follows federal depreciation rules for state income tax purposes. Consult a tax professional before claiming accelerated depreciation.
When you sell the property, the IRS recaptures depreciation previously claimed at up to 25% (unrecaptured Section 1250 gain). Colorado taxes the gain at the standard 4.40% flat rate.
Colorado Lodging & Sales Taxes
The Colorado STR Tax Stack
Every booking under 30 nights triggers a layered set of state and local taxes — the combined rate depends on exactly where your property sits.
Colorado's STR tax structure combines a statewide sales tax with county lodging taxes, local marketing district taxes, and city/county sales taxes. Rates below show a representative example for a property in unincorporated Summit County.
Combined rates typically range from ~7% to 15%+ depending on location
Colorado Department of Revenue, Sales & Use Tax Topics: Rooms & Accommodations (Apr 2026); Airbnb Colorado occupancy tax help article; Summit County STR Tax Information page.
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Airbnb bookings (state-collected taxes) | Airbnb collects and remits Colorado state sales tax and many county/district taxes directly to the Colorado DOR | These taxes flow through Airbnb — you still need a sales tax license but may not remit these amounts yourself |
| VRBO / direct bookings | Host is responsible for collecting and remitting all applicable taxes unless the platform has a specific agreement | You must collect the correct combined rate at booking and file returns on your assigned schedule |
| Home-rule city taxes (e.g., Denver, Aspen) | Host or platform — home-rule cities administer their own taxes separately from the state | Check with your specific city; you may need a separate local license and must remit city taxes independently |
Stays of 30 consecutive days or more are generally exempt from Colorado sales tax. Always verify the exact rates for your property's location using the Colorado DOR DR 1002 publication, as rates change frequently.
Platforms
How Airbnb, VRBO & Others Handle Colorado Taxes
Major platforms collect some taxes automatically, but hosts remain responsible for registration, income reporting, and any taxes the platform does not cover.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | Yes — 1099-K if gross transactions exceed $5,000 (2024); $20,000+ threshold for 2025 | Yes — collects Colorado state sales tax (2.9%) and many county/district taxes for state-collected jurisdictions; home-rule cities may differ | Annual earnings summary available in host dashboard by January 31 |
| VRBO / Vrbo | Yes — 1099-K above applicable threshold | Partial — collects taxes in some Colorado jurisdictions; verify coverage for your specific location | Annual earnings summary available in host account |
| Direct / other platforms | No automatic federal reporting below thresholds; income still taxable | No — host must collect and remit all applicable state and local taxes | Host must maintain own records |
Using Multiple Platforms?
Aggregate all gross income across platforms when calculating your Colorado and federal tax liability. Each platform reports only its own payments — you must combine totals on Schedule E or C. Keep separate records per platform to reconcile 1099s with your actual receipts.
US Reporting Rules (Not DAC7)
DAC7 is a European Union directive and does not apply in Colorado or the US. US platforms report host income to the IRS under domestic 1099-K rules administered by the IRS and Colorado Department of Revenue.
Airbnb US tax documents help article (2025); Airbnb Colorado occupancy tax collection article; IRS 1099-K reporting thresholds.
Illustrative P&L: Schedule E vs. Schedule C
Example Colorado STR earning $30,000/year in gross rental income. Figures are illustrative only.
Record-Keeping
Stay Audit-Ready as a Colorado STR Host
The IRS and Colorado DOR can audit up to 3–6 years back — organized records protect you and support every deduction you claim.
| Keep | How long | Why |
|---|---|---|
| Booking records (dates, guest names, nightly rates, platform statements) | At least 6 years | Proves rental days vs. personal-use days; supports income figures on Schedule E/C and sales tax returns |
| Receipts for all deductible expenses (repairs, cleaning, supplies, insurance, utilities) | At least 6 years | Required to substantiate deductions if audited by IRS or Colorado DOR |
| Sales tax returns and payment confirmations filed with Colorado DOR | At least 6 years | Demonstrates compliance with Colorado sales tax license obligations; required for any DOR audit |
| Property purchase documents, closing statements, and improvement records | Indefinitely (until property sold + 6 years) | Establishes depreciable basis and supports gain/loss calculation and depreciation recapture on sale |
| 1099-K and 1099-MISC forms received from platforms | At least 6 years | IRS matches these to your return; discrepancies trigger automatic notices |
Colorado's statute of limitations for tax assessments is generally 3 years from the filing date, but can extend to 6 years if income is understated by more than 25%. Keep records accordingly.
Estimator
Short-Term Rental Tax Estimator
Plug in your bookings and costs to see your likely taxable position.
Your Numbers
Total short-term-rental income, before costs.
Allowable running costs, mortgage interest, depreciation and platform fees.
Your top income-tax band, as a percentage.
Estimated tax owed
Income tax on your net rental profit at your marginal rate.
Illustrative estimate. A simplified model to orient you — it is not tax advice. Confirm your situation with a qualified local professional.
Sources & notes
This page is for educational purposes only and does not constitute tax or legal advice. Tax laws change frequently — always verify current rates and requirements with the Colorado Department of Revenue and a qualified tax professional.
- Colorado Department of Revenue — Sales & Use Tax Topics: Rooms & Accommodations — Official guidance on Colorado sales tax applicability to STRs, including the 30-day exemption. tax.colorado.gov (April 2026).
- Colorado Department of Revenue — DR 1002 Sales Tax Publication — Current state, county, and special district sales tax rates. tax.colorado.gov.
- Airbnb — Occupancy Tax Collection and Remittance in Colorado — Details which Colorado taxes Airbnb collects and remits on behalf of hosts. airbnb.com/help/article/2298.
- Airbnb — US Tax Documents — 1099-K and 1099-MISC thresholds and issuance dates. airbnb.com/help/article/414 (2025).
- Summit County, Colorado — Short-Term Rental Tax Information — County-level STR tax breakdown including 2% lodging tax effective January 1, 2023. summitcountyco.gov.
- Madras Accountancy — Colorado Rental Property Filing Requirements — Overview of Form DR 0104, DR 0104PN, sales tax license requirements, and filing frequencies. madrasaccountancy.com (April 2026).
- WhippleWood CPAs — Short-Term Rental Tax Rules — Explanation of the 14-Day Rule, Schedule E vs. Schedule C treatment, and IRS STR definition. whipplewood.com (2025).
- AirDNA — How to File Airbnb Income — Guide to Schedule E, Schedule C, deductions, and 1099 reconciliation for STR hosts. airdna.co (2024, updated 2025).
Questions
Frequently Asked Questions — Colorado STR Taxes
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