Using accessory dwelling units for short-term rentals

Jan. 26, 2022

The Denver Department of Excise and Licenses has seen an uptick in short-term rental (STR) license applications for use in accessory dwelling units (ADUs).

The Department wants to remind applicants and licensees there are rules for creating an ADU and renting ADUs as short-term rentals. Applicants should be aware of the ADU rules before applying for a short-term rental license and are required to follow all applicable city laws and licensing rules and regulations to maintain their short-term rental license in the City and County of Denver.

An accessory dwelling unit is a second, subordinate dwelling unit located on the same zone lot as a primary single unit dwelling. It can be attached to the primary unit or be in a separate, detached structure. For example, it can be a basement apartment in a single-unit house, or it can be in a detached structure in the backyard.

Some ADUs are eligible to be used as short-term rentals if the rules governing STRs are followed. These include, but are not limited to:

• The ADU was built legally and is properly permitted by the city’s Community Planning and Development Department.
• The property owner lives onsite in the primary dwelling unit.
• The applicant cannot live in the ADU and use the primary dwelling unit as a short-term rental.
• Only one short-term rental can be operated at a time by those maintaining the primary dwelling unit as their primary residence, meaning the property owner cannot operate or advertise the primary dwelling unit and the accessory dwelling unit as separate STRs.
• The owner of an entire duplex structure cannot live in one of the duplex units and use the second unit as a short-term rental.

If a short-term rental license is issued for the primary dwelling unit’s property address (typically the address will be a whole number, such as 123 Main St.), the main residence or the ADU unit can be used for STR (both units at the same time to a single STR renter, or to separate STR renters at different times). A licensee cannot rent the main residence for STR and the ADU for STR to different renters at the same time.

If a short-term rental license is issued to an ADU-specific address (typically, a “1/2” address, such as 101 1/2 Grant St.), then only the ADU can be used for the licensed STR.

Read more information and get the answers to other frequently asked questions about ADUs and short-term rentals.

And for more information and additional context about the use of ADUs as short-term rentals, you can read an interpretation of the Denver Zoning Code.

For other questions, you can email [email protected].

Thank you,

Denver Department of Excise and Licenses