A new ballot initiative to impose a “waste tax” on vacant buildings has been filed with the Colorado Legislature. The proposed tax would apply to properties that have been vacant for more than six months, starting January 1, 2026. A vacancy would be defined as any building used for commercial or residential purposes for less than 40% of the year. The tax would be imposed at 10% of the monthly rental or lease rate of similar properties, increasing by 10% each subsequent vacant month until taxed at 200% of the monthly rental or lease rate after 26 months of vacancy. Revenue collected from the proposed tax would be divided equally and added as a bonus to the salary of teachers employed by public schools in Colorado.
A review and comment hearing on the waste tax proposal is scheduled for January 21, 2025. The proposal is similar to one pushed by the Colorado Association of Ski Towns (CAST) to allow local governments in Colorado to impose taxes on vacant residential properties. Although that proposal originally included short-term rental properties, that part of the proposal was recently dropped.
CAST’s proposal would allow taxes on properties that sit unoccupied for a certain number of days each year. In some ski resort areas, the tax could be imposed on around 40% of homes. According to 2020 U.S. Census Bureau data, Hinsdale County in Colorado has the highest percentage of seasonal vacant housing units at 95% of all housing units in the county. Proponents want to see revenue from the tax support affordable housing for resort area workers.
Similar proposals have cropped up recently in California, with two such taxes being adopted in the city of San Francisco. San Francisco’s taxes apply to commercial properties that sit vacant 182 or more days per year. An “empty homes tax” was passed by voters but struck down last fall. That decision is being appealed.
If you have questions about the taxes that apply to rental or vacation properties, reach out to one of the experts listed below today.
TECHNICAL INFORMATION CONTACTS:
Susan Bittick
Principal
Ryan
512.476.0022
susan.bittick@ryan.com
Matt Poling
Principal
Ryan
303.222.1845
matt.poling@ryan.com
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