Rent your condo by the night in Bernalillo County and the Assessor now calls it a business
Rent your condo by the night in Bernalillo County and the Assessor now calls it a business
2026-09-15 · New Mexico · Compliance
Bernalillo County has reclassified roughly 1,000 properties from residential to non-residential because they are operated as short-term rentals — and the county says it is the first policy of its kind in New Mexico.1
What the policy is
It is an Assessor's policy applied under state statute, not a county ordinance. The County's announcement of March 31, 2026 states the definition and the mechanism:
“Short-term rentals are houses, condos, or apartments that are rented fewer than 29 consecutive nights. Short-term rental classifications do not include leased apartments or hotels.”
“By state statute, properties deemed as 'short-term rentals' are being reclassified from residential properties to non-residential properties, or effectively commercial as the property is being used as an income source for the owners.”
The scale of it
“When Assessor Damian Lara took office in January 2023, there were approximately 4,000 properties considered short-term rentals in the county. After a thorough analysis of each property completed in 2025, there were about 1,000 properties reclassified as short-term rentals. The remaining approximately 3,000 properties remained unchanged in classification and are now available as more usable long-term housing.”
And the protest record
“in 2025, 138 short-term rental protests went before the Bernalillo County Protest Board… The board ruled in favor of the Office of the Assessor in 80% of the protested short-term rental cases… In 17% of cases, settlements were reached with property owners prior to protest hearings. Only 3% were reversed by the Protest Board and were appealed by the Office of the Assessor for further consideration.”
Owners retain the right to protest a classification after receiving their Notice of Value.
Why this lands on owners inside associations
The reclassification is a tax consequence, and it is a significant one. Moving from residential to non-residential classification removes the protection of New Mexico's residential valuation limit — the constraint that holds annual assessed-value increases down for residential property. An owner who has been quietly listing a unit is exposed to a change in classification, not merely a change in value.
For an owner in a community whose declaration already prohibits short-term rentals, the exposure compounds. The same conduct now produces a private covenant violation and a public tax reclassification, and the second is visible in the county's own records.
The board-facing point
Assessor classification data is public. An association that wants to know which of its units are being operated as short-term rentals can read the classification record. That is a materially better position than most boards think they are in, and it avoids the two approaches associations usually resort to — monitoring listing platforms, which is unreliable and adversarial, or relying on neighbour complaints, which is selective by nature.
It also changes the character of an enforcement decision. Selective enforcement is the standard defence to a covenant action, and a board that can identify every affected unit from a public record has the option of enforcing consistently rather than enforcing against whoever was reported.
Two cautions before acting on it
Classification is the Assessor's conclusion, not proof of a covenant breach. It is evidence that the property has been assessed as a short-term rental. What the declaration prohibits is a separate question, answered by the declaration's own language — which in many older New Mexico declarations addresses “business use,” “transient occupancy” or “single-family residential use” rather than short-term rentals as such.
Watch the definitional wording. The County's release says “fewer than 29 consecutive nights.” Real-estate guidance circulating alongside it says “fewer than 30 consecutive days.” Those are not the same test, and a board relying on the boundary should quote the County.
The wider state picture
Bernalillo County is deliberately out in front. Its own release frames the policy as “the first of its kind in New Mexico” and says it “is now available to all Assessors, statewide, for adoption or as a guide for policy on a county-by-county basis.”
The Legislature has been asked to stop this and has not. A short-term rental work group reported to a legislative interim committee in December 2025 asking assessors to pause reclassification and recommending that the Legislature “Clarify in §7-35-2 that residential dwellings remain residential for property-tax classification even if rented short-term.” Its own report warned that reclassification “may trigger mortgage note calls” if loans fall outside secondary-market guidelines. The 2026 follow-up memorial, HM 62, died in House Taxation.
So the pause has no legislative backing, and the policy Bernalillo County wrote is the one on offer to the other 32 counties.
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