Wednesday, May 24, 2023
Utah homeowners get a tax break on their primary residence, even if its a primary mansion
Urban Living
Posted By Babs De Lay on May 24, 2023, 4:00 AM
The mission of a tax collector is to provide the public with fair market value of real and personal property, and to comply with local laws that counties and our state have enacted for the taxing system. We can be taxed on our real estate holdings, mobile homes, aircraft, motor vehicles and property used in the operation of a business.
In Utah, property tax notices go out mid- to late-summer to review and accept/pay or protest. School districts account for roughly 60% of the property tax revenues collected in the state. Your County Assessor's computers determine a property's value and if it's residential, the owner will automatically get a 45% deduction from their home value to determine its taxable rate— which means you pay taxes on just 55% of your home's total value.
We are blessed with a relatively low tax rate here. But be glad you don't live in—say—Los Angeles, where as of last April, high-end homes are now subject to a "mansion tax" that levies a fee on transfers of real property that sell for more than $5 million. Revenue from the tax will fund affordable housing and services to combat homelessness in the city.
We don't have transfer taxes in Utah. The story I was told when I got my real estate license years ago was that we realtors made a deal with the tax assessors to give them sales data each year so that the assessors could calculate property taxes in exchange for not levying transfer taxes on the sale of land, homes, condo, commercial buildings and multiplexes.
These types of "mansion taxes" have nothing to do with the capital gains taxes on profits that the IRS charges. Our Legislature has not considered charging any transfer tax in some time and, well, there's an argument for and against it on both sides of mainstream politics—to either keep taxes low or tax more and give the funds to worthy causes like funding homelessness programs.
As you can imagine, many California millionaires are challenging this transfer tax in the courts. And there are huge arguments over whether this kind of tax will have any effect on the local economy. Some say it will have zero impact and others say that L.A. is going to lose millions of dollars in revenues.
Wealthy homeowners and buyers are just like anyone else—they want to pay the least amount of taxes and save as much money as possible when selling a property. Some sellers who thought of asking $5,025,000 might list their home instead for $5 million just to avoid the taxes, which will unfairly affect comparable sales. Some think that this kind of tax will discourage flippers and speculators. We shall see.
Find more information about your property taxes as slco.org, or call 385-468-8000 or your local assessor.
About The Author
Babs De Lay
A full-time broker/owner of Urban Utah Homes and Estates, Babs De Lay serves on the Salt Lake City Historic Landmark Commission. A writer and golfer, you'll find them working as a staff guardian at the Temple at Burning Man each year.
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