Can You Run a Short-Term Rental in Lake City, Colorado?

Yes, with a Town of Lake City permit if the property is within town limits. The town's ordinance requires a permit to operate or advertise any rental under 30 consecutive days. Residential zones are capped at 43 permits citywide and cost $375 per unit per year, plus a one-time $100 application fee. Permits are non-transferable, so they don't pass to a new owner.

This post covers properties inside the Town of Lake City. Properties outside town limits in unincorporated Hinsdale County fall under county rules, so contact Hinsdale County. This is general information, not legal or tax advice.

What does the town ordinance require?

According to the ordinance (Section 23-5, adopted by Ord. 2023-13 on November 15, 2023 and amended by Ord. 2026-03 on February 18, 2026), a permit is required to operate or advertise a short-term rental defined as a unit rented for fewer than 30 consecutive days. Hotels, motels, lodges and boarding houses are exempt. Each rental unit needs its own permit, and a third-party manager may handle the rental for the owner.

How many permits are available?

In residential zones, the town limits permits to 43 total, which equals 15 percent of residential units when the ordinance passed, and a waiting list applies once the cap is reached. No person or entity may hold more than three permits. In non-residential zones, there is no annual fee and no limit on the number of permits.

What does it cost?

• Application fee: $100, one time.
• Residential zones: $375 per unit per year.
• Non-residential zones: $0 annual fee.

Does a permit transfer when I buy the property?

No. The ordinance says permits are issued to a specific owner, cannot be transferred, and do not run with the property. If you are buying a home that is currently a short-term rental, you shouldn't assume the permit comes with it. Ask the town how the cap and waiting list apply to a new owner, and write that question into your due diligence.

What are the safety and operating rules?

• Insurance: $500,000 in property liability coverage, or proof that a hosting platform provides equal or greater coverage.
• Fire inspection: Must be passed before renting, and the report lists the occupancy limit.
• Occupancy: The greater of two occupants per bedroom plus two, or one occupant per 200 square feet of interior living space. The town manager may allow up to two more case by case.
• Taxes: A state sales tax license is required, and owners must remit sales and lodging taxes.
• Advertising: The permit number must appear in all advertising and be posted in the unit.
• Local contact: A responsible agent must be reachable 24 hours a day and respond to complaints within two hours.

What are the penalties?

Within a 12-month rolling period, the first offense is a warning, the second is $500, and third and later offenses can reach $2,650 and/or permit revocation.

How do renewals work?

A new permit must be purchased each January. With two or fewer violations in the prior 12 months and taxes and fees current, renewal is allowed. With three or more violations in 12 months, the permit cannot be renewed and any new application is treated as new.

What should you check before buying a rental property in Lake City?

• Is it inside town limits? Confirm jurisdiction before you assume which rules apply.
• What zone is it in? Residential and non-residential zones are treated differently.
• Is a permit available? Ask the town about the cap and waiting list.
• What do the covenants say? Private restrictions may also apply.
• Can you meet the 24-hour contact rule? Many owners hire a local manager.

How does Lake City compare with other valley towns for rentals?

Rules differ from town to town. Lake City's town ordinance caps residential-zone permits at 43 and does not transfer permits to a new owner, while the Town of Mt. Crested Butte lists no cap and Gunnison County's new program, effective January 1, 2027, costs $150 for three years with no cap. Because of these differences, an investment that works on paper in one place may not work in another. If rental income is part of your plan, confirm permit availability first, then run your numbers using conservative occupancy and the full costs: permit, insurance, taxes, management and maintenance.

Frequently asked questions

Are short-term rentals legal in Lake City, CO?

Yes, with a town permit for properties within town limits, subject to zone and cap rules.

How much is a short-term rental permit in Lake City?

$100 application, then $375 per unit per year in residential zones and $0 annually in non-residential zones.

Is there a cap on rentals in Lake City?

In residential zones the cap is 43 permits citywide.

Does the permit transfer to a buyer?

No. Permits are issued to a specific owner and do not run with the property.

Connect with a great real estate agent in Lake City, Kelsey Loftis with Crystal Peak Properties.
Phone: (970) 784-6768 · Email: kelseyloftis@gmail.com · Website: crystalpeakproperties.com

Source: Town of Lake City, Short-Term Rental Ordinance, Sec. 23-5 (townoflakecityco.gov), reviewed October 19, 2026.