Property taxes often cause confusion: Why did my taxes increase? Why does a condominium-hotel pay more than a corporate hotel? How is this equitable?

The short answer is that it’s complicated. The longer explanation lies in how Colorado’s property tax system works, and how it applies (often imperfectly) to resort communities like ours.

To begin, property taxes in Colorado are calculated based on value, but not as a simple percentage of what a property is worth. Instead, the amount due comes from a two-step formula:

1. Actual Value × Assessment Rate = Assessed Value
2. Assessed Value × Mill Levy = Property Tax Owed

The assessment rate—set by the state legislature—varies by property type. For taxes payable in 2026, residential properties are assessed at 6.7% of their actual (market) value, while commercial properties are assessed at 27.9%.

On the surface, that sounds straightforward: businesses are taxed on a higher percentage of their value than homeowners. But when you look closer, the math produces results that surprise even longtime locals.

Consider two types of lodging properties in Vail. According to Eagle County’s 2026 tax estimates, traditional hotels (taxed at the 27.9% commercial rate) pay an average of $4.53 in property tax per square foot, while condominium-hotels (taxed at the 6.7% residential rate) pay an average of $7.25 per square foot.

Despite similar operations and clientele, condo-tels shoulder a nearly doubled effective tax rate compared to adjacent hotels. This unexpected reality highlights the main inequity: many assume larger businesses pay more, yet the system often reverses that assumption.

How is that possible? It comes down to valuation and classification.

Commercial hotels are valued based on their income potential and comparable hospitality properties (what the property earns and what similar hotels are worth). Residential condominiums, even those that function as short-term rentals, are valued at their market rate (what a willing buyer would pay for that individual unit).

In a resort community, where second-home demand and limited supply drive property prices sky-high, residential market values often exceed commercial appraisals on a per-square-foot basis. As a result, even though commercial properties have a higher assessment rate, their taxable base per square foot is frequently lower than that of surrounding residential units.

The result defies expectations: in sought-after resort areas, residential property owners—especially condo-tels—can pay a higher effective tax rate than full-scale hotels across the street, despite being assessed at a lower rate. This is the main issue at the heart of the property tax debate.

It’s easy to see why this creates confusion and a sense of unfairness. Both types of properties rely on the same community infrastructure - roads, public safety, fire protection, and schools - yet the state’s classification system treats them differently.

The system feels confusing because it truly is confusing. It reflects decades of well-intentioned policies, complex valuation methods, and the unique market forces of mountain towns that don’t often fit neatly into statewide formulas.

Colorado’s property tax structure was never designed for the realities of resort economies, where condo-tels blur the lines between “residential” and “commercial.” The tax code hasn’t fully caught up to that reality.

That doesn’t mean the system is broken; it means we need to understand it before assuming unfairness. Property taxes fund essential local services (schools, recreation districts, fire protection), and those dollars stay right here in our community.

As Eagle County continues conversations about affordability, housing, and economic equity, it’s worth taking the time to understand that property tax assessment rates and property taxes paid are two different things based on their classification and valuation methodology.

Chris Romer is president & CEO of Vail Valley Partnership, 3-time national chamber of the year. Learn more at VailValleyPartnership.com