Complete Colorado

‘Vacant’ homes tax bill aimed at Colorado mountain towns

UPDATE: A House legislative committee voted to reject House Bill 1036 on Feb. 9.

DENVER–A Democrat-sponsored bill authorizing local governments to levy new taxes on residential properties deemed “vacant” has been introduced in the Colorado legislature. House Bill 26-1036 also allows multiple jurisdictions to band together and form joint taxing authorities, with the new revenue dedicated to funding government-run housing programs.

While the measure applies state-wide, Rep. Elizabeth Velasco, whose district includes Eagle, Garfield and Pitkin counties, aimed the measure at Colorado mountain towns.

Velasco and her co-sponsor, Rep. Brianna Titone, call attention to what they claim is a 40% residential vacancy rate in many mountain towns, and believe the bill will incentivize secondary homeowners to rent out their otherwise empty properties.

Joshua Sharf, senior fellow in fiscal policy at Independence Institute,* a free market think tank in Denver, says most property owners Velasco and Titone are trying to force into the rental business will not get the chance to weigh in.

“The people who would be taxed in general have no say in it,” Sharf told Complete Colorado, noting many secondary homeowners do not claim Colorado residency. “They’re going to leave that up to the localities which means that somebody could be spending half their time there and if a locality decides that’s vacant then they need to put it up as a short-term rental to avoid the tax.”

The bill defines the term “vacant” as “unoccupied and not used as a residence for a specified amount of time as determined by the county, municipality or local housing tax authority imposing a tax pursuant to this section,” and excludes all short-term rentals.

The bill also allows for “2 or more counties, cities and counties, or municipalities to form a joint taxing authority to collectively establish, levy, collect, and enforce local taxes on vacant residential properties within the boundaries of the authority.”

While the vacancy tax would be a first of its kind if passed, this is not the first attempt at a such a proposal. Local governments pushed for vacancy tax authority during the 2025 legislative session but came up short.

“The right answer isn’t to penalize people who maintain and keep up their properties even though they’re not there much of the time,” continued Sharf.  “The right answer is to break down development restrictions and allow more building. This looks more like a revenue grab than an attempt to solve a housing shortage.”

Governor Polis has previously expressed skepticism over the idea of a vacancy tax. Inquiries to Polis’ office regarding his position on HB 1036 went unanswered.

The bill was introduced on Jan. 14 and is scheduled for a House Finance Committee hearing on Feb. 2 at 1:30pm.

*Independence Institute is publisher of Complete Colorado.

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