Owning a vacation rental home can be a very fun investment which feels like a hobby. Bringing joy to travelers is rewarding, earning extra income is great and having your very own vacation spot is a dream come true.
While all this may be true, before you make the purchase, it is vital to know and research the rules and regulations surrounding the area and the anticipated costs, to ensure you are making the right investment. Vacation homes are a huge investment and if it is done without much forethought, you could encounter some major headaches along the way.
Therefore, make sure you take time to do your research and ask yourself important questions about your goals to determine whether or not a particular vacation rental home will meet your investment and/or your personal needs. This article explores why purchasing a vacation rental in Breckenridge might be a good idea.
Breckenridge is a Colorado town at the base of the Rocky Mountains’ Tenmile Range. Known for its ski resort, year-round alpine activities and Gold Rush history, the town features colourfully painted buildings from the 1880s and '90s mining era which are converted to galleries, boutiques, coffee shops, restaurants and stores today. There’s a reason Breckenridge is often listed as one of the prettiest towns in America. Victorian architecture was the inspiration for the miners 150 years ago and continues to define the image of Breckenridge. In fact, be sure not to miss the great festivals and events marking the calendar all year long!
The Centennial state features the rugged Rocky Mountains, lush meadows, majestic waterfalls, and roaring rivers; all of which have desirable properties nearby. With 41 state parks and 26 ski resorts, there’s something to do during every season, but all the fun isn’t just outdoors. A vibrant art and music scene and exciting nightlife attract millions of visitors to Denver, Colorado Springs, Fort Collins and more.
With so much to do and see, it’s easy to understand why Breckenridge is one of the best states to purchase a vacation rental home.
If you ever visit, you’ll see just how hard it is to leave and how quickly you’ll want to return. That’s precisely what you need from a vacation rental – a place that renters want to return to year after year. Renting out your Breckenridge vacation property can be an excellent way to own a vacation home while supplementing some of the costs.
While communities may allow vacation rentals, as with any city, Breckenridge may have specific guidelines and restrictions. In addition, homes in covenant neighborhoods may have other rules and regulations you will need to follow. Make sure your goals for your vacation home line up with any regulations that may be in place.
As fascinating as Brenckenbridge sounds, the local rent regulations seem pretty tough so you want to know everything that is in force. Below are some of the recent developments in terms of regulations prevalent in Breckenridge.
The major changes that were incorporated into the new ordinance are:
If you received a notification and your property is not in the Town Limits of Breckenridge, please contact Airbnb directly to update your taxing jurisdiction. To locate your taxing jurisdiction, please visit http://gis.summitcountyco.gov/Map/ and search for your property. In the lower left hand box you will see "Jurisdiction".
Other Notable Developments:
Accommodation Unit Advertising Ordinance For information please see the Administrative Guidelines:
The Town of Breckenridge has contracted with a 3rd party contractor, Harmari by LTAS Technologies, to assist in Short Term Rental Compliance. Harmari, along with the Finance Department, will be utilizing a module in order to identify unlicensed and non-compliant Accommodation units within the Town.
In January 2019, the Town will be adding a call center to address the complaint resolution portion of the short term rental regulations.
Taxes can become very complicated with vacation rentals. To be considered an income property you cannot vacation in your home for more than 14 days, or to be considered a short-term rental you cannot rent your home for more than 14 days. Except in rare cases, Property owners and Managers are responsible for any taxes associated with renting a property.
On November 2, 2010, the voters of Breckenridge approved a 1% increase to the Accommodations Tax beginning January 1, 2011 to provide sustainable marketing funds.
The Town requires hotels, motels, bed & breakfasts, property management companies, and homeowners who short-term lease (less than 30 days) their Breckenridge residences to collect a 3.4% Breckenridge Public Accommodation Tax, which is remitted directly to the Town of Breckenridge along with the 2.5% sales tax. For your convenience, the sales and accommodations taxes are reported on the same tax return.
All businesses, property managers, and homeowners collecting the accommodations tax are required to have an Accommodation Unit License and a Colorado Sales Tax License. To obtain a Town license, contact the Town Clerk's office for an application. After your application is received and approved, you will be designated as a monthly or quarterly filer and a business license will be mailed to you. Sales tax returns, along with the appropriate remittance of sales tax collected, are due on the 20th of each month following the period they were collected. Late returns are penalized with a penalty of 10% of the sales tax (minimum of $15) plus 1% interest for each month the payment is outstanding.
The Colorado Department of Revenue collects state and county taxes and is the agency where businesses register trade names. The toll-free telephone number for the New Business Hotline is 1-800-333-7798 or http://www.sos.state.co.us/. State application forms and general information for conducting business in Colorado is available by calling that number. Colorado Business Registration forms, CR100, and instructions are available on the state's website, https://www.colorado.gov/revenue. Summit County, the county in which Breckenridge is located, requires no business license.
Knowing how much you will need to pay in property taxes will help you estimate how much you will need to earn in rent to recover these costs.
Maintenance is a big part of owning any home, much less vacation rentals. It becomes even more challenging when you live far away from your home. Local short-term regulations require that someone is able to be onsite within a short time. So you will need to ask important questions like, Should you hire an airbnb virtual assistant?Should you hire a professional property management company to look after your home? Do you intend to do repairs on your own? What will travel cost you? Do you have connections to local contractors for major repairs? You will need to respond quickly to maintenance needs if you have renters in the home. Otherwise, they will have a bad experience and share that experience with other potential renters.
Before you purchase your home make sure you know how you plan to cover maintenance costs and that you have the resources to ensure the maintenance gets done. It is important to plan for how much you will need to spend on maintenance and upkeep.