Thinking about turning a Ouray home or condo into a vacation rental? You’re not alone. Ouray’s alpine setting draws steady demand, but the rules can feel complex and they differ by location. You want clear, practical guidance that helps you avoid missteps and protects your investment. In this guide, you’ll learn how to confirm which rules apply, what permits and taxes to expect, common zoning and operational limits, and the due diligence steps smart buyers take before they list. Let’s dive in.
City vs county: know your jurisdiction
Short-term rental rules depend first on where the property sits. Properties inside the City of Ouray are regulated by the city. Parcels outside city limits fall under Ouray County. Each local authority can set different requirements and processes, so your starting point is confirming the jurisdiction and zoning for the exact parcel.
- City of Ouray: City Council and the municipal code govern in-city properties. Planning or community development staff can explain permit requirements and where short-term rentals are allowed. https://www.cityofouray.com/city_offices/community_development_vs3/short-term_rentals.php
- Ouray County: The Board of County Commissioners and the county land use code apply in unincorporated areas. https://ouraycountyco.gov/351/Short-Term-Rental-Permitting
- Private restrictions: HOAs, CC&Rs, and condo bylaws can prohibit or limit nightly rentals even if the city or county allows them. Always verify private rules in writing.
Tip: Use the county assessor or GIS parcel map to confirm boundaries and zoning, then contact the appropriate planning office for allowed uses.
Permitting basics to expect
Most Colorado mountain communities require some form of short-term rental registration or permit before you host. While details vary by jurisdiction, you should be prepared for the following common elements:
- Registration or permit required before operating, with annual renewal and a fee
- Permit number displayed on listings and at the property
- A local 24-7 contact or on-call manager for neighbor and code-enforcement calls
- Proof of insurance or added liability coverage suitable for short-term rentals
- Safety compliance, such as smoke and CO detectors, fire extinguishers, egress, and posted emergency instructions
- Occupancy limits tied to bedroom count or a fixed per-bedroom formula
- Possible differences for owner-occupied vs non-owner-occupied properties
- Potential citywide or neighborhood caps on the number of STR permits
What to prepare for your application
Have these items ready to streamline approvals:
- Property address, parcel ID, and zoning designation
- Owner contact information and local manager contact details
- Proof of insurance and a statement of occupancy or floor plan
- Parking plan and trash management details, if required
- Evidence of tax registration or accounts, if requested by the local finance office
Safety and fire readiness
Safety and health rules protect guests, neighbors, and your permit status. Expect requirements such as:
- Smoke and carbon monoxide alarms in appropriate locations
- Accessible fire extinguishers and a posted emergency evacuation plan
- Clear egress from sleeping spaces and compliance with building code
- Coordination with the local fire district for inspections where required
- Septic or wastewater constraints if the property is on a private system
If you plan to add bedrooms or make structural changes, your project may trigger building permits and inspections. Confirm how improvements interact with building code and your STR permit.
Taxes and business licenses
Short-term rentals typically involve two tax layers and, in some cases, added licenses or accounts.
- Local lodging or sales taxes: Municipalities and counties often require you to collect and remit lodging or sales taxes on short stays. Registration with the city or county finance office is common.
- State taxes: Colorado may require state sales or lodging tax registration and filing through the Colorado Department of Revenue.
- Marketplace collection: Some booking platforms collect and remit certain taxes, but hosts are often still required to register locally and ensure full compliance. Clarify who collects what and when filings are due.
A clean setup makes remittance easier:
- Confirm required local lodging or sales tax accounts with the city or county finance office.
- Verify state registration and filing requirements with the Colorado Department of Revenue.
- Track whether platforms collect any portion of taxes and what remains your responsibility.
- Calendar local and state due dates to avoid penalties and interest.
Compliance, complaints, and enforcement
Local governments use fines, administrative penalties, and permit suspension or revocation to address violations. Common triggers include operating without a permit, exceeding occupancy limits, repeated noise complaints, or failing to maintain a local contact.
If neighbors raise concerns, expect contact from code enforcement or the non-emergency police line. Quick response and documented corrective actions can reduce escalation. Keep a log of guest communication, house rules, and any mitigation steps. Consistent compliance protects your permit and your reputation.
Buyer due diligence checklist
Before you assume a property will work as an STR, walk through this checklist. Getting written answers during your contract period helps you avoid unpleasant surprises.
- Confirm jurisdiction and zoning
- Use county GIS or the assessor to verify if the parcel is in city or county limits.
- Confirm from City or County planning for allowed uses and STR process.
- Review HOA or condo rules
- Request CC&Rs and bylaws. Look for any nightly-rental prohibitions or limits.
- Confirm tax accounts
- Ask the city or county finance office what local lodging or sales tax accounts are required, and verify state obligations.
- Request seller documentation
- Ask for copies of any existing STR permit, renewal history, and complaint records.
- Validate safety and capacity
- Count bedrooms for occupancy limits and confirm egress. Verify detector locations and extinguisher readiness.
- Verify utilities and wastewater
- On septic, confirm system capacity and service records. On sewer, ask about capacity and any special requirements.
- Plan parking and trash
- Measure onsite parking and confirm any on-street rules. Outline a trash storage and pickup plan.
- Confirm insurance coverage
- Ask your insurer about STR coverage or endorsements and obtain a quote.
- Budget for compliance
- Estimate permit fees, inspections, insurance, safety upgrades, and potential mitigation measures.
Pro tips for smooth hosting
Small systems make a big difference for guest experience and compliance.
- House rules guests actually read
- Keep a one-page quick-start guide with quiet hours, parking instructions, trash guidance, and emergency contacts posted by the entry.
- Parking clarity
- Paint or sign onsite spaces and message parking limits in pre-arrival instructions.
- Neighbor relations
- Share your 24-7 contact with immediate neighbors and respond quickly to concerns.
- Winter readiness
- Plan snow removal and ice management so guests can park safely and access exits.
- Inventory safety checks
- Test alarms, confirm extinguisher pressure, and restock first-aid kits on a set schedule.
When a different rental strategy fits better
If the HOA is restrictive or permits are limited, consider a longer minimum stay or a mid-term rental approach that aligns with the rules. Some areas allow longer stays where nightly rentals face tighter caps. Your cash-flow model should account for what is allowed in the parcel’s zone today and how rules could change over time.
How we help you make confident decisions
If you are buying with STR potential in mind, you want clear answers fast and a team that can coordinate from afar. With remote-friendly coordination, introductions to local service providers, and documentation that you can evaluate from anywhere, Amanda brings a concierge approach tailored to second-home and investment clients in the San Juan Mountains.
Ready to evaluate a property or discuss an investment plan? Connect with Amanda F Swain to discuss your goals and next steps.
