Could the short-term rental license process be more confusing, difficult to enforce and ripe with opportunities for shenanigans?
Maybe, but it would take a lot of work. Home value? Pitkin County real estate values have been increasing by more than 20% a year. Good luck with an accurate value of a home. And then the homeowner is supposed to know how many days they are going to rent their home. You might hope to rent it for 100 days and only succeed in renting it 20. Crazy.
How about a tax based on rental income (top line)? That would be simple and clean. Does a tax run afoul of TABOR, then make this year’s license based on a percentage of last year’s rental income; the wise homeowner will accrue money from last year’s rental income to pay for next year’s license.
Worried about non-compliance? Owners who don’t declare rental income to the IRS face a big painful stick, much bigger than anything Pitkin can wield. There are many good pro and con arguments to be had about regulating STRs (I personally am mostly for it in the hope that it moves some rental stock back to long term, depresses real estate pricing, and reduces the likelihood of living between two active STR homes), but I do have sympathy for promoting tourism which generates income for locals and the town purse alike.
But if we are going to go down the fee, tax, license path — please, please, please, make it simple to administer and comply with. For an example of doing it wrong, please see the latest Colorado Department of Revenue retail delivery fee of $0.27 per delivery for hard to administer, monitor and comply with. Want more revenue? Then increase the sales tax rate by 0.05%, but I fear this is TABOR at work so we need a fee and not a tax and instead small-business owners spend more money complying with a fee than the state collects. And when the time comes, if you want to support business big and small, support the Colorado economy and reduce tax shenanigans vote to end TABOR.
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