Yes, with a catch. Inside city limits, a vacation rental needs a permit, and in most places the permits are already spoken for. Outside the city, the rules are looser but the tax bill is real.
What counts as a vacation rental in Durango?
The city defines it as a dwelling rented for lodging for 1 to 29 days. It treats that as a commercial use of a residential property. Rentals of 30 days or longer are not vacation rentals, and the city does not regulate them (City of Durango). A month-to-month tenant is just a tenant.
Where are vacation rentals allowed inside city limits?
Only in certain zones: the Central Business zone, the Mixed-Use zones, a few Planned Development zones, and Established Neighborhoods 1 and 2 (EN-1 and EN-2). The city caps permits in the two neighborhood zones at 22 and 17. Planned developments and mixed-use projects usually carry their own caps, one building at a time.
Most caps are full. The city's summary table counts 125 active vacation rentals across all zones, with 26 properties waiting for an EN-1 permit. A property that wants in joins a waitlist first.
Four neighborhoods are closed to the business outright: Twin Buttes, Three Springs, Rock Ridge and Sky Ridge. Elsewhere, the HOA documents and any agreement with the city must say that vacation rentals are allowed. If they stay silent, the answer is no.
What permit do you need?
A Limited Use Permit from Community Development, issued before you list or advertise. The city's vacation rental checklist lists these requirements, last updated in November 2021, so confirm current fees by phone:
- A $750 application fee and a completed land use application
- A list of neighbors within 300 feet, who get a notice
- A narrative, a site plan and a floor plan
- In most cases, one off-street parking space per bedroom
Staff approve, refer or deny the request within 30 days of filing. Your ads must show both the permit number and the business license number. Leaving them off is grounds for revoking the permit.
Can you transfer or sell a vacation rental permit?
No. The permit dies with the sale. The city says transferring a property with a permit automatically invalidates it. A buyer starts over, which matters when you shop for an investment home. Ask the listing agent whether a rental permit exists before you count on its income.
Neighbors count too. On the same street segment in an EN zone, a second vacation rental needs Planning Commission approval, and a third will not be permitted.
What taxes do vacation rentals pay?
In the city, hosts need a city business license and must collect and pay sales and lodgers' taxes. The lodgers' tax is 5.25%, on top of the city's 3.5% sales tax on lodging, per the city's filing page. That covers hotels, inns and hosts on Airbnb or Vrbo. Our answer on getting a business license in Durango explains the application.
Outside city limits, the county's lodging tax page lists a 2.9% state sales tax, 3.0% county sales tax and 2.0% county lodging tax on stays under 30 days. Owners file with the Colorado Department of Revenue, not the county.
What about unincorporated La Plata County?
The county says it does not currently license businesses other than liquor, marijuana, ambulance and secure transport, per its licenses and permits page. It adds that a land use permit may still apply. Its vacation rental guidance asks owners to check their HOA covenants, confirm that the septic system can handle the extra use and provide a local contact. Call County Planning at 970-382-6263 before you buy.
For help from a local manager, browse the vacation rental agencies and property managers in the directory. Looking for a long-term place instead? See what rent costs in Durango.