Bernalillo County Assessor Unveils First-of-Its-Kind Short-Term Rental Reclassification Policy

Bernalillo County Assessor Damian Lara reclassified approximately 1,000 Airbnb-style properties as commercial businesses, mailing Notices of Value on April 1 that stripped short-term rental hosts of the 3 percent annual valuation cap that had shielded their tax bills for years.

The policy draws a clean line at 29 nights. Any house, condo, or apartment in Bernalillo County rented for fewer than 29 consecutive nights is now classified as a nonresidential commercial property. Leased apartments and hotels are excluded. In 2023, the county tracked roughly 4,000 properties operating as short-term rentals on platforms like Airbnb and Vrbo, meaning about one in four received a commercial designation in this cycle.

The financial exposure is real and compounding. New Mexico law caps annual residential property valuation increases at 3 percent regardless of market movement. Once a property flips to commercial, that protection disappears and the assessor values it at full market rate. In Santa Fe County, where a comparable reclassification took hold, some owners' November tax bills more than doubled, the combined result of higher nonresidential tax rates and the abrupt shift from capped to market-rate valuations.

For Sandoval County residents who own or manage a short-term rental in Bernalillo County, whether a casita near Old Town Albuquerque or a rental bungalow in the South Valley, the first thing to verify on the Notice of Value is the classification line. A change from "residential" to "nonresidential" or "commercial" confirms the reclassification. The assessed valuation line deserves equal scrutiny: a property held at a capped figure for years could jump sharply to reflect current market value in a single tax cycle.

Owners who want to challenge the classification have until May 1, 30 days from the April 1 mailing. Filing a protest starts an informal meeting with a field appraiser at the Assessor's Office at 415 Silver Ave SW in Albuquerque. If that meeting does not resolve the dispute, a formal hearing before the County Valuation Protest Board follows. Documentation pointing to residential use, such as evidence the owner resides on the property, rental frequency logs, and prior residential classification notices, will anchor the strongest cases.

Lara, who chairs the New Mexico Counties Assessors Affiliate, framed the move as a matter of consistency rather than new rulemaking. "This is not something that we decided to do as county assessors," he said. "This is something that has been in state law for many years and other assessors have already implemented this, and we're trying to have uniformity across the state."

The policy preserves a meaningful exemption for small operators: homeowners who rent only a single room or an attached casita while continuing to live on the same lot are not swept into the commercial category. That distinction separates a neighbor sharing space from a property that functions effectively as a private hotel room.

Hosts who absorb higher tax bills will face pressure to push nightly rates up, a shift that could cool bookings during high-traffic periods like the Albuquerque International Balloon Fiesta and reduce visitor spending that ripples through Rio Rancho and Corrales businesses on both sides of the county line.