27,000 Empty Apartments and 10,000 Homeless in Denver: Is a ‘Ghost Tax’ the Answer?

As nearly a third of Colorado households are severely housing cost burdened, nearly 27,000 rental units sit empty across Denver, according to some estimates. Now, housing advocates are saying it’s time to tax those vacant homes, arguing that landlords who keep units off the market should help fund affordable housing.

They call it a “Ghost Tax” and say it could unlock badly needed rental units while raising funds for more affordable housing. But landlords warn the policy could backfire and push up rents in a market where the median asking price is already $1,783, according to the Realtor.com® July Rental Report.

While rent prices have dipped nearly 8% in the past year, they’re still far above pre-pandemic levels, when Denver became a magnet for remote workers and investors alike. Now the city faces a new question: What should be done when homes are left empty while people go without one?

What is the ‘Ghost Tax’?

Taxes on vacant homes are far from a new solution. These levies have been used by local governments in housing constricted areas to discourage property owners from leaving units empty while demand soars.

While the specifics of the taxes vary depending on the jurisdiction that has implemented them, generally speaking, landlords are charged a fee if their rental units sit vacant for an extended period—often around six months or more. The goal is to push owners to either rent out those homes, sell them, or pay into city funds used to support affordable housing initiatives.

The logic is simple: Homes without people add fuel to a crisis where people are increasingly cost burdened by housing. By taxing long-term vacancies, cities hope to bring underused housing back into circulation or use the revenue to build more units for those priced out of the market.

It’s something Colorado has struggled with in recent years. The Centennial State recently earned a “C” grade on the Realtor.com® 2025 Affordability Report Card, ranking 27th in the nation. Despite state-level efforts to spur new construction, Denver approved just 2,706 permits for multifamily buildings (five units or more) in the second quarter of 2025—a modest number for a city in crisis. For advocates, that’s exactly why the vacancy tax matters: If new supply isn’t coming fast enough, unused homes sitting vacant shouldn’t be ignored.

Why Denver advocates want it now

In a letter sent to Mayor Mike Johnston and the Denver City Council, and obtained by CBS news, a coalition of housing organizations—including the Colorado Coalition for the Homeless, Enterprise Community Partners, and Archway Communities—called on city leaders to impose the ghost tax:

“Assessing a fee on rental units in the Denver market that are left vacant, with their rents unchanged for a minimum period of time, could bring in significant revenue for Denver. This approach," the letter reads, "is preferable than potentially taxing unoccupied second homes in Denver as there is less likely to be an abundance of such homes."

The second-home tax has taken root in nearby Montana, another Western state whose housing market was radically altered by pandemic-era migration patterns. But while Montana’s second-home tax is geared at bringing down property tax burdens for residents, Colorado is taking aim at a different problem entirely.

In an interview with CBS, Cathy Alderman, chief communications and public policy officer for the Colorado Coalition for the Homeless, said,  “We want to encourage landlords to lower their rents on units that are sitting vacant while people are living outside.”

There are more than 10,000 people experiencing homelessness in Denver in 2025, according to data from the Metro Denver Homeless Initiative—an 8% jump from a year prior. While the overall rate of increase has slowed “significantly, according to MDHI, it remains a problem for the city.

The landlord pushback

In response to the proposal, landlords and property groups argue that taxing vacant units will do more harm than good—especially for renters, many of whom are already cost burdened. 

The idea that empty homes are the enemy of affordability is backward, these groups argue. 

“A high vacancy rate is good for the consumer,” Drew Hamrick, general counsel for the Apartment Association of Metro Denver, told CBS.

Instead of offering relief, Hamrick warns, a vacancy tax could drive rents even higher.

"Taxing that or imposing any type of financial penalty moves the market in the wrong direction. All costs, including taxes, ultimately percolate down to the renter," he added. "If you raise the fees or taxes on sesame seeds, all of a sudden Whoppers start to cost more."

Lessons from other cities

Denver wouldn’t be the first city to test a “ghost tax.” Around the country, similar efforts have played out with wildly different results, offering a glimpse of the political minefield ahead.

In Oakland, voters approved a flat $6,000 annual vacancy tax. San Francisco took a similar swing, only to watch the measure unravel after it was deemed unconstitutional by a higher court.

Meanwhile, Honolulu is still tinkering with its own version, underscoring how untested and experimental these measures remain in the U.S.

And then there's South Lake Tahoe, where voters crushed a proposed $6,000 vacancy tax last year, with nearly three-quarters rejecting it outright. 

What’s at stake for Denver and beyond

If Denver imposed a vacancy tax on the city’s estimated 27,000 empty rental units, the financial impact could be significant. While exact figures depend on the structure of the policy, even a modest fee could raise the revenue that advocates say is needed to fund affordable housing initiatives like construction incentives and rental vouchers for those priced out of the market.

But the stakes are more than financial. While corporate landlords are the intended target, critics worry that mom-and-pop landlords or renters themselves could get hit the hardest by such an initiative. For renters, the practical outcomes remain murky: Would a vacancy tax lead to more units on the market and lower rents—or just higher costs?