By the JW Group
Rental income can help carry a Telluride home, but the rules are detailed and differ by jurisdiction. The Town of Telluride, Mountain Village, and unincorporated San Miguel County each set their own licensing, zoning, and tax requirements. This guide summarizes Telluride short-term rental rules so owners and buyers can plan with confidence.
Key Takeaways
- The Town of Telluride limits properties in its Residential Zone to three short-term rentals and a maximum of 29 nights per year.
- Town short-term rentals owe a total of 17.22 percent in taxes, with 11 percent going to the Town and 6.22 percent to the state and county.
- Mountain Village requires a license to advertise short-term lodging, charges 9.47 percent sales tax and 4 percent lodging tax, and requires a separate license for each rental unit.
- Short-term rental licenses do not transfer to a new owner in the Town of Telluride, so buyers must apply for their own.
Town of Telluride License Types and Limits
The Town regulates short-term rentals, defined as 29 nights or fewer, by license type and zone. Knowing your zone comes first.
Key License Rules
- A Classic License applies outside the Residential Zone and allows unlimited rental nights, while a Limited License allows up to 29 nights per calendar year.
- A Residential License applies in the Residential Zone and allows three short-term rentals and three long-term rentals per calendar year, with no more than 29 short-term nights total.
- Residential license limits attach to the property rather than the owner, so they do not reset when the property sells, and new applicants must obtain prior rental records.
- Rentals longer than 29 nights but under six months need a Mid-Term License with no fee and no short-term rental taxes, and rentals over six months need a Long-Term License.
Check the Town's Residential Zone Map before you buy, because the zone decides how much rental income is possible.
Telluride Taxes, Fees, and Compliance
Telluride's licensing process comes with fees, taxes, and annual paperwork. Staying compliant protects your license.
Costs and Requirements to Plan For
- Classic License fees range from $1,332 for one sleeping room to $5,727 for six, while Limited and Residential licenses run about $381.50 to $425.50.
- Owners must file Town taxes monthly through Rentalscape by the 20th of the following month, and the Town has no tax agreements with online rental platforms.
- The Town requires a license number in every ad, an annual notarized bulk form with ownership disclosure, and renewals by early January.
- Town code bars any person or entity from holding a financial interest in more than two short-term rental properties, a rule that took effect October 24, 2023.
Income from cancelled bookings is still taxable, so keep accurate records for every reservation.
Mountain Village Short-Term Rental Rules
Mountain Village is a separate jurisdiction with its own licensing and taxes. A Town license does not cover a Mountain Village property.
What Mountain Village Requires
- Anyone who advertises a home for short-term accommodations needs a Mountain Village business license, whether or not the home is actually rented.
- Each rental unit needs its own license; licenses expire December 31, and renewals are due January 1 with a 30-day grace period.
- Sales tax is 9.47 percent, made up of 1 percent county, 2.9 percent state, 4.5 percent town, and 1.07 percent SMART, plus a 4 percent lodging tax.
- Online travel companies collect and remit taxes on their bookings, but owners still need a business license and must handle taxes on bookings made elsewhere.
Confirm HOA rules separately, since some Mountain Village associations restrict rentals or limit rental days.
San Miguel County Rules and Buyer Due Diligence
Outside the towns, San Miguel County's Land Use Code governs rentals. Due diligence before closing prevents expensive surprises.
County Rules and Pre-Purchase Checks
- County Land Use Code 5-3001 covers renting a single-family home, condo, or duplex for under 30 consecutive days in unincorporated areas.
- Accessory dwelling units, caretaker units, and county deed-restricted units are not eligible, and short-term rentals are prohibited in the Open Space, High Country Area, and Affordable Housing PUD zones.
- No county permit is required in the West End zone, but state and county sales tax and county lodging tax still must be collected and remitted.
- Before buying, verify the zone, license status, deed restrictions, HOA rules, and tax filings, and ask for rental history rather than relying on projections.
Rules change over time, so confirm current requirements directly with each jurisdiction before you commit.
FAQs
What are the basic Telluride short-term rental rules?
Telluride requires a license before you advertise, limits Residential Zone properties to three rentals and 29 nights a year, and taxes short-term rentals at 17.22 percent.
Does a short-term rental license transfer when I buy a Telluride home?
No. In the Town of Telluride, the new owner must apply for a license, and residential rental limits stay with the property.
Do Mountain Village rentals follow the same rules as Telluride?
No. Mountain Village has separate licensing, a 9.47 percent sales tax, and a 4 percent lodging tax.
Own a Telluride Rental Home With the JW Group
Our extensive local knowledge and deep understanding of the Telluride real estate landscape have empowered us to achieve record-breaking transactions and proven results. With a robust track record, we have seamlessly navigated the competitive Telluride market and assisted hundreds of families in securing their dream homes amid the area's serene beauty. We combine cutting-edge technology with a personalized touch, and we believe our Telluride market expertise is unrivaled. Our high-tech, high-touch approach is tailored to each client's real estate aspirations, ensuring a seamless buying and selling experience in the heart of Telluride.
Connect with the JW Group today.
