Denver STR Rules: Primary Residence Requirement and Excise License

Denver, Colorado's 2016 STR ordinance restricts STR operation to primary residences only. There is no investor-only / vacation-home pathway in Denver — the only legal STRs are owner-occupied properties where the owner can demonstrate primary residency through utility bills, voter registration, driver's license, and similar documentation. Investor portfolios in Denver are not legal under city code. The result: Denver's STR inventory is genuinely smaller than market size would suggest, with active enforcement maintaining the primary-residence-only status.

Licensing & Registration

Denver STR Business License: $50/year, plus business-license fees ($250-$500). Application requires: primary-residence proof (driver's license, utility bills, voter registration), $1M liability insurance, life-safety self-certification, parking compliance, lodger's tax registration. The primary-residence requirement is verified annually; operators who move out (and continue operating) face license revocation.

Lodging & Occupancy Taxes

Colorado state sales tax 2.9% + Denver city sales tax 4.81% + RTD/CD 1.1% + cultural facilities 0.1% = 8.91% sales tax. Denver lodger's tax 10.75% on stays under 30 days. Effective Denver STR lodging tax: ~13.65% (sales-tax exemption applies to lodging in some categories; verify with tax professional). Airbnb collects Colorado state and Denver lodger's tax automatically.

Penalties & Enforcement

Operating without primary-residence-status STR license: $999/day per violation. Denver's enforcement is among the most aggressive in the Western markets — dedicated compliance staff, regular platform audits, complaint-driven inspections. Caught operators face license revocation plus back-tax + penalty assessments.

Recent Changes

Denver's primary-residence framework has been politically stable through 2024-2025. Workforce-housing concerns dominate political discussion; STR rules tightening or staying-the-same is more likely than loosening. Investors evaluating Denver should not plan around an investor-pathway opening. The owner-occupant house-hack model is the only legal entry point.

Tax Strategy for Compliant Investors

Even within Denver's regulatory framework, properly-licensed STR investors retain the federal tax stack. Cost segregation accelerates depreciation, the STR loophole can convert losses to active-income offsets for materially-participating owners, and 100% bonus depreciation under OBBBA applies to all reclassified 5- and 15-year assets. See cost segregation for Airbnb properties for the full playbook.

Frequently asked questions