Updated on February 19, 2026
A bill that would have allowed Colorado communities to tax vacant homes died in committee on Feb. 9, 2026, after more than four hours of testimony and concerted opposition by short-term rental activists.
House Bill 1036, sponsored by Reps. Brianna Titone and Elizabeth Velasco, would have authorized counties and municipalities, with voter approval, to levy either an excise tax or an additional property tax on residential properties deemed “vacant.”
The definition of “vacant” was residentially zoned property that had been unoccupied for a period determined by the local government. The revenue could be used only for “affordable, attainable, or workforce housing,” according to the bill language.
After a lengthy debate, the House Finance Committee voted 7-to-4 to postpone the bill indefinitely.
“This was a win for common-sense policy,” said Dana Lubner, a member of the Colorado Short-Term Rental Association (COSTRA) board and Director of Community Development at Rent Responsibly. “Even with an exemption for licensed short-term rentals, the bill created uncertainty and unintended consequences in communities with complex or capped licensing systems. Colorado’s housing challenges deserve thoughtful solutions that are clear, consistent, and workable in the real world, and HB 1036 wasn’t there yet.”
The legislation exempted licensed short-term rentals from being classified as vacant. However, the bill would still have penalized property owners who were in the process of obtaining a license.
Supporters framed the measure as a way to generate funding for affordable housing in high-cost mountain and resort communities, where large percentages of homes sit empty for portions of the year.
“This bill is about the visitors and the tourists who enjoy our beautiful resort communities to pay their fair share and serve the local workers who serve those communities,” Rep. Velasco told the committee before the vote. “I want the ultrawealthy to pay their fair share to support our working families.”
At first glance, the exemption for licensed short-term rentals appeared to shield the industry. But leaders within COSTRA argued that the language created serious practical problems and launched an advocacy campaign against it, including meeting with lawmakers, coordinated testimony, and providing insights on the unintended consequences of the legislation.
The exemption hinged entirely on license status, which is an unstable and inconsistent standard across Colorado, Dana said.
“As written, the bill only protected properties that were already licensed as short-term rentals. That sounds simple, but in practice it wasn’t,” she explained. “Many Colorado jurisdictions have complicated local ordinances that make obtaining or renewing a short-term rental license difficult. In some areas, it can take months due to registration requirements, inspections, or even moratoriums on new licenses.”
“So if a property owner was in the middle of trying to get licensed, waiting on approval, or stuck in a capped system, they would not have clearly qualified for the exemption. Under the bill’s structure, they could have been treated as ‘vacant’ even though they were trying to operate legally,” she added.
In Breckenridge, for example, licensing caps have created waiting lists projected to take decades to clear. Under HB 1036, owners unable to secure a license due to local restrictions could have been classified as vacant and taxed accordingly, said Julia Koster, Executive Director of COSTRA.
Executive Director, COSTRA
That, opponents argued, would create perverse incentives and additional instability in already constrained markets.
Beyond STR implications, the bill faced heavy criticism over implementation challenges.
In her testimony before the vote, Julia warned lawmakers that vacancy taxes have struggled elsewhere.
“Vacancy taxes have been overturned or defeated in multiple jurisdictions across the country,” she said. She cited Steamboat Springs and Lake Tahoe, where voters rejected similar measures, as well as San Francisco, where a court struck down the city’s “empty homes tax.”
“You simply cannot assess this tax based on assumptions as to which homes are vacant and which are occupied. You have to assess all homes in the community to determine who is subject or not subject to this tax,” she said. “That creates a massive administrative lift that I am not sure has been considered.”
County treasurers echoed that concern. Alamosa County Treasurer Amy McKinley called the proposal “an absolute disaster for anyone in the government involved in trying to implement this legislation.”
Real estate and business groups also warned of litigation risks.
“This is inviting lawsuits that will cost taxpayers and municipalities,” said Colorado Springs broker Windy Bailey.
Proponents frequently pointed to Vancouver, British Columbia’s empty-home tax as a model. But opponents challenged its track record in generating more affordable housing.
Parker White, Director of the Colorado Competitive Council, told lawmakers that Vancouver has seen increased inventory but not improved affordability.
“You are increasing supply, but you are not increasing the availability or the affordability of that supply in relation to the incomes of that area,” Parker said.
“Our position is that if Colorado is going to spearhead for the country on a certain housing policy, and the only model we have is a model that exists in another country, and within that system, we’ve also shown that it is ineffective at accomplishing what it set out to accomplish, that’s a poor model with which to base our discussions off of.”
More than 60 individuals signed up to testify during the four-hour hearing. Supporters largely included county commissioners and municipal leaders from communities facing acute housing shortages.
The bill’s defeat is a win for STRs in 2026, but it also signals that housing-related tax proposals are likely to resurface, particularly in resort-heavy counties with high seasonal vacancy rates.
“Colorado’s housing challenges are complex, and we take them seriously,” Dana said. “When housing proposals intersect with short-term rentals, COSTRA works to ensure policies are clear, workable, and grounded in real-world operations. That kind of clarity benefits communities and responsible property owners alike.”
…
GET UPDATES