Most people assume Colorado short-term rentals are a mountain-town game: Breckenridge, Estes Park, Steamboat. What surprises buyers is that the rules 25 minutes south of Denver are tighter than the rules in most ski towns.
Of the five markets I get asked about most (Castle Rock, Castle Pines, Parker, Lone Tree and Highlands Ranch), four have effectively closed the door on nightly rentals. One hasn't.
If you're shopping with any version of "and maybe we Airbnb it," this is the map you need before you write an offer.
The short version
| Market | Nightly rentals (short stays) | What it takes | Practical read |
|---|---|---|---|
| Castle Rock | Allowed | Town business & sales tax license; collect sales + 6% lodging tax | The only open door of the five, but your HOA decides |
| Castle Pines | Prohibited | Nothing to apply for | Closed since 2018 |
| Parker | Prohibited | Nothing to apply for | Closed since 2019 |
| Lone Tree | Prohibited for anyone new | Permit window closed May 2023 | Closed to buyers |
| Highlands Ranch | Almost certainly prohibited | County won't license inside a Planned Development | Closed for most homes |
Castle Rock: open, and unusually so
Castle Rock is the outlier. The Town does not have a short-term rental ordinance, does not cap the number of rentals, does not require owner occupancy, and does not issue an STR-specific permit. Town Council looked at regulating them in 2020 and decided not to. The position from the dais was essentially we don't have a problem here, and we don't want to create one with new rules. That's still where things stand.
What you do owe:
- A Town business and sales tax license
- Town sales tax and the Town's 6% lodging tax, on stays of 29 nights or fewer
- State and county sales tax on the same stays
Stacked up, a Castle Rock guest pays roughly 14% in combined tax: 2.9% Colorado state sales tax, 1% Douglas County sales tax, 4.2% Town of Castle Rock sales tax, and the Town's 6% lodging tax. Airbnb currently collects and remits these for Castle Rock automatically, but that's a platform courtesy, not a legal shield. Direct bookings and some other platforms are your filing to make. Get the license before your first guest, not after.
The catch in Castle Rock isn't the Town. It's the neighborhood. More on that below, because in this market that's where most STR plans actually die.
Castle Pines: closed since 2018
Castle Pines shut the door early. The City has prohibited residential rentals of fewer than 28 consecutive days since 2018, under Ordinance 18-07.
Note the number: 28, not 30. Castle Pines drew its line two days shorter than almost everyone else, which means a 29-day corporate stay can work there while a 27-day one cannot. If you're structuring a mid-term rental in Castle Pines, that distinction is the whole ballgame. Put the term in writing in the lease, and confirm the current threshold with the Castle Pines City Clerk before you rely on it.
Parker: closed since 2019
Parker was the first Douglas County municipality to draw a hard line, in October 2019. The Town's Land Development Ordinance treats a dwelling rented for periods of less than 30 days as a "tourist home," and a tourist home is not a permitted use in Parker's residential zone districts.
The practical effect: no nightly rentals in a Parker home, no permit to apply for, no grandfathering process. Commercial lodging in commercially-zoned areas is a separate matter and remains allowed.
One housekeeping note: Parker rewrote its entire Land Development Ordinance effective June 2024, the first comprehensive rewrite since the Town incorporated in 1981. Nothing in that rewrite reopened the door, but if you need to cite the rule to a lender or a partner, get the current section number from Parker Community Development rather than quoting the 2019 ordinance.
Enforcement is complaint-driven, which some investors read as an opening. It isn't one. A neighbor complaint is a code case, and a code case on a rental you bought for cash flow is not a risk worth underwriting.
Lone Tree: closed to anyone buying today
Lone Tree's rule is the one that trips up buyers, because a handful of legal short-term rentals do still operate there and show up in the data.
Lone Tree City Council adopted Ordinances 23-01 and 23-02 on February 7, 2023, prohibiting new short-term rentals citywide. A small group of pre-existing operators was allowed to continue, but only if they already held a City business license as of March 8, 2023, had remitted taxes for the three prior years, and obtained a permit by May 7, 2023. That window is closed and has not reopened.
The surviving permits carry real conditions: two adults per bedroom and eight occupants maximum (excluding children under five), one rental party at a time, the license number displayed in every advertisement, building and fire code compliance, no excess automobiles with parking on the driveway, and the City's reserved right to inspect. Violations run $500, then $750, then $1,000, with a $1,000 minimum per violation on a criminal conviction.
If a Lone Tree listing is marketed as "STR permitted," treat that as a question, not a feature. Whether a legal nonconforming permit survives a change of ownership is something to confirm in writing with the City before your inspection deadline. Most jurisdictions don't let those transfer.
Highlands Ranch: blocked by zoning, then blocked again by covenants
Highlands Ranch is unincorporated, so there's no town hall to ask. Douglas County's short-term rental ordinance (O-023-003, adopted July 2023) governs.
The County does license STRs, and the license is substantial: a $500 first-year application review fee plus a $130 license fee, annual renewal at $270 plus $130, a one-year term, a parking plan, a notarized responsible-agent declaration, posted renter signage inside the home, written renter instructions, a life-safety affidavit, and Building and Health Department approvals.
But the ordinance carves out one category, and it's the one that matters here:
A dwelling within a Planned Development (PD) zone district shall not be licensed as a Short-Term Rental Property unless such PD specifically allows such use.
Highlands Ranch is one of Douglas County's four Planned Developments, as are Castle Pines Village, The Pinery, and Roxborough. Unless the community's own governing documents affirmatively permit short-term rentals, the County won't issue a license, which means most Highlands Ranch homeowners will not qualify. Confirm your specific property with Douglas County Zoning Compliance at 303-660-7460 before you count on anything.
Then there's a second layer. Highlands Ranch homes answer to the Highlands Ranch Community Association and, in many neighborhoods, a sub-association on top of it. Plenty of those documents impose minimum lease terms of 30 days or more independent of what the County says. Two locks on the same door.
Where the County license does work cleanly is the unincorporated acreage outside a Planned Development: the larger-lot properties between the towns. That's a real and under-shopped corner of this market, and it's a different search than the one most buyers start with.
The layer that kills more deals than zoning
Here's the part that catches even experienced investors: in south Douglas County, your HOA and metro district are usually a tougher gatekeeper than your municipality.
Castle Rock allows short-term rentals. The Meadows, Crystal Valley, Montaine, The Canyons and most other master-planned communities inside Castle Rock are governed by recorded declarations that can, and often do, impose minimum lease terms, prohibit "commercial use" of a residence, or require board approval to lease at all. A town that says yes cannot override a covenant that says no.
If you want real numbers on what those districts cost, I broke them down community by community in this post on Castle Pines HOA fees and metro districts.
A covenant restriction is also not something you can fix after closing. Zoning changes with a council vote. A declaration changes only with a supermajority of owners.
Pull the full HOA declaration, any sub-association documents, and the metro district's rules during your inspection objection period, not after. Search them for "lease," "rental," "transient," "commercial," and any number followed by "days." If the answer isn't clearly written, ask the management company for it in writing.
The 30-day workaround that's legal across this whole list
Every restriction on this page is defined by a time threshold: under 30 days in Parker, Lone Tree and unincorporated Douglas County, under 28 in Castle Pines. Above the line, you're a landlord, not a lodging operator.
That makes furnished mid-term rentals the compliant strategy in four of these five markets: 30-plus day stays for relocating families, corporate assignments, traveling medical staff at Sky Ridge and Parker Adventist, and homeowners displaced by insurance claims. Lower turnover, no lodging tax, no license, and no code case waiting on a neighbor's mood.
Confirm the HOA's minimum lease term still clears it. Some declarations set six months or a year.
What's changing at the state level
Colorado has no statewide short-term rental license. Every rule that matters is local. Two things worth tracking:
Property tax classification. A 2024 bill, HB24-1299, would have reclassified short-term rentals that aren't the owner's primary or secondary residence as commercial "lodging property," moving them from the residential assessment rate to the far higher nonresidential one. It was postponed indefinitely in committee in April 2024. The idea has resurfaced repeatedly since 2023, and it remains the single largest financial risk to a Colorado STR pro forma. Underwrite with that in mind.
County lodging taxes. A 2025 law, HB25-1247, lets county voters raise a county lodging tax as high as 6%. Four counties did exactly that in November 2025. Douglas County levies no county lodging tax at all and put no such question on the ballot, but this is the kind of measure that can show up in any November.
Your pre-offer checklist
- Confirm the actual jurisdiction. A "Castle Rock, CO" mailing address does not mean the property is inside Town limits. Unincorporated parcels use Castle Rock addresses constantly, and the rules are completely different. Verify with the County's zoning lookup.
- Confirm the zone district , specifically whether it's a Planned Development.
- Read the declaration before your inspection deadline. Minimum lease term is the line that matters.
- Price in licensing and tax. County licensing runs $630 the first year and $400 annually after. Castle Rock nightly stays carry roughly 14% in stacked tax.
- Never take "great Airbnb potential" from listing remarks as a legal opinion. It's marketing copy, and it's wrong more often than it's right.
Looking at properties with this in mind?
If you're shopping Castle Rock, the unincorporated acreage, or anywhere else in south Douglas County and want to see what's actually out there: want me to send you the 3-5 best matches for what you're looking for? Tell me the price range, the area, and whether rental use is part of the plan, and I'll put a short list together.
And if you already own here and this has you thinking about what your place is worth either way: want me to send your current equity range for your home in your area? Takes me about ten minutes, no obligation attached.
Max Ferguson · Max Realty · (719) 749-3115 · max@maxrealtyco.com
Related reading
- Castle Pines HOA Fees and Metro Districts: What You Actually Pay, Community by Community
- Relocating to Douglas County, CO: The Out-of-State Buyer's Guide for 2026
- Living in Parker, CO: The 2026 Guide for Buyers and Newcomers
A necessary disclaimer
Short-term rental law changes fast, and it changes quietly. A town council can amend an ordinance at a Tuesday night meeting that never makes the paper, and the change is binding the moment it passes.
Some of what you just read was assembled from limited public records. Several of these jurisdictions don't publish their short-term rental ordinances in a searchable or readable format. One of them posts it only as a scanned image. Parts of this were pieced together from local reporting and government summaries rather than the ordinance text itself. Some of it may be incomplete or already out of date. Treat this page as a starting point, not an answer.
Double-check anything you plan to act on. Call the town, city, or county directly, and involve an attorney when real money is on the line. I'm a real estate broker, not an attorney or a tax advisor, and nothing here is legal or tax advice.
And know that the answer moves deal by deal. Two houses on the same street can land in completely different places depending on zoning, the HOA declaration, the metro district, whether the parcel is inside town limits at all, and how the property has been used before you. There is no substitute for checking your specific address and reading your own governing documents.
Last verified August 2026.