Possessory Interest

Property owned by government entities is, by statute, exempt from property tax. This would include any property owned by the federal, state or local governments. When a private entity leases or is permitted to use exempt property to generate revenue it is called a Possessory Interest. The Colorado Supreme Court ruled that Possessory Interest is an interest in real property, and is therefore taxable. The Possessory Interest is taxable to the person, or other legal entity, that leases or uses the exempt property. Possessory Interests are generally valued based on the lease or permit fee.

Some Examples of taxable Possessory Interest include:

  • Grazing livestock on public lands
  • Leasing land owned by Gunnison County at Gold Basin Industrial Park
  • Renting space at the Gunnison County Airport for a commercial endeavor
  • Operating a guiding or outfitting business on public lands
  • Renting office space at the Gunnison Valley Hospital for a private practice
  • Leasing government land used in the operation of a ski or recreational area