Homeownership comes with many benefits—freedom, investment, security, and pride are just a few. Buying a home also means paying property taxes. At Sego Homes, we are often asked, “How much are property taxes in Utah?” As you’re considering a move to The Beehive State, we’ve got the buzz on what you need to know!
What Is Property Tax?
Real estate property tax is a fee paid annually or semi-annually to your local government (municipality, township, county, special district, or school district, depending on where you live). The funds support municipal services, like local government, schools, roads, police and fire departments, parks, water, and sewage systems.
The tax is required for non-moving properties, like your primary residence, vacation home, or rental property. Property tax rate varies from state to state and county to county. Your local tax rate is a percentage applied to the assessed value of your property. Also known as the “mill rate”, the percentage represents the percentage per $1,000 of your home’s assessed value. For example, if your mill rate is 0.75% and your home is assessed at $400,000, your annual property tax bill is $3,000 ($400,000 X .0075).
The amount you pay is determined by the assessed value of your home, which will change in time. Here are the factors that impact the amount you will be assessed in property tax:
- Location: A prime location could cost you, whether you live close to the beach, downtown, or sought-after amenities.
- Age of your home: Older homes often have a lower assessed value than new ones, but not always.
- Size: The total square footage of your home affects the value.
- Construction type and structural strength: The structural integrity of your home will be factored in.
- Renovations: When you upgrade your home, you increase the value.
- Median home value in your area: The quality of other homes throughout your neighborhood affects your assessed property value.
- Income: If you’re generating income, as in rent, the amount is reflected in your home’s assessment.
- Replacement cost: How much would it cost to replace your home if it were destroyed?
Use this property tax calculator to estimate your Utah property tax.
What Happens If I Move During The Tax Year?
When you move to a new state, you’ll pay property taxes on the home you purchase for the amount of time you live in the state during that tax year. You’ve probably paid the full year’s taxes on the home you sold, but you’ll be reimbursed retroactively at the closing of the sale of your home for the percentage of taxes covering the time from closing to the end of the year. Similarly, when purchasing a home, you pay the property tax that’s applicable from the time you take ownership to the end of the year.
Is Assessed Value the Same as Market Value?
Don’t be alarmed if your home’s assessed value seems low. The assessed value is not the same as the market value, which is what the home is estimated to sell for in the current housing market.
Every tax district has an established assessment ratio. The assessor uses this percentage to calculate your property tax. For example, if you live in an area with an 80% tax rate, you would multiply your home’s market value by 0.80. A home with a market value of $400,000 with an 80% tax rate would be assessed at $320,000.
In Utah, residential properties are taxed at only 55% of the home’s value, when they are the primary residence. That means your $400,000 home will be assessed for taxes at a value of $220,000, and the mill rate will be applied to the lower amount.
Utah Property Tax Information, Exemptions, and Relief for Homeowners
How much are property taxes in Utah? And what property tax relief can you expect there?
According to the US Census Bureau, Utah has 1,151,414 housing units throughout the state and the average property tax rate is 0.58%, well below the national average.
Utah Property Tax Exemptions
The State of Utah offers property tax exemptions to certain ownership situations.
Primary Residential Exemption: As mentioned above, if you occupy your Utah home as your primary residence, you qualify for a 45% primary residential exemption. Your property taxes in Utah are based on 55% of your home’s fair market value.
Active Duty Exemption: The primary residence of an active military serviceperson serving at least 200 continuous days within 365 days qualifies for an exemption of the total taxable value of the home. These people serving our country are exempt from paying Utah property tax!
Disabled Veterans Exemption: Receive a credit of up to $505,548 in the taxable value of your home; the actual amount is dependent on the percentage of the homeowner’s disability.
Senior Citizens Exemption: If you’re 66 or older, you might qualify to earn up to $1,259 with the Circuit Breaker Program if your income does not exceed $40,840.
Tax Relief for Utah Homeowners
In addition to the Utah property tax exemptions, homeowners may qualify for income tax relief programs.
The Utah Solar Incentives allow a 30% credit on your federal income taxes. You might also earn tax relief for installing a qualifying battery for your solar panel through Rocky Mountain Power’s Wattsmart Battery Program.
You can earn more environmentally friendly benefits with the Energy Efficient Home Improvement Tax Credit. Take advantage of a $2,000 annual tax credit for energy-efficient heat pumps, water heaters, and biomass stoves. Receive a 30% tax credit on home improvements, such as installing energy-efficient doors, windows, and insulation (up to $1,200 per year). Upgrade your electrical panel and get a $600 credit.
The Utah Office of Energy and Development offers the Renewable Energy Systems Tax Credit (RESTC). And many utility companies have other tax-saving programs for Utah homeowners.
Renting vs. Owning in Utah
If you’re not quite convinced about whether you want to rent or buy a house in Utah, Sego Homes has some insights to share.
The Pros of Homeownership
A home is a great investment! When you buy a home, you can expect to build equity immediately. Property values increase over time. Depending on the housing market, the increase can be rapid. You can leverage that equity to buy a rental property in Utah, expanding your revenue and return on investment.
Also remember that when you pay rent, you’re contributing to your landlord’s mortgage payment and getting no ROI for yourself
Making on-time mortgage payments boosts your credit score. When you want a loan in the future, a strong credit score encourages lenders to provide you with more credit at a better interest rate.
Homeownership allows for tax deductions. Tax exemptions and tax relief programs reduce the total cost of ownership for a home. Lower your tax bill when you take advantage of deductions that aren’t available to renters.
A mortgage payment may be less than rent. You might discover that the monthly rent check takes more out of your account than the mortgage payment. Imagine saving money by owning a home!
The Pros of Renting
No maintenance is required. When you rent a home, the landlord is responsible for all repairs and maintenance. It’s not your problem or expense.
Pay less upfront. Buying a home requires closing costs, including the down payment. A lease usually requires first and last month’s rent and maybe a security or pet deposit.
Mobility. When you rent a home, you have the freedom to move on at the end of your lease. You don’t need to sell the property.
Connect with Sego Homes Today!
Now that you have a clear answer to “How much are property taxes in Utah?” Sego Homes invites you to see what’s waiting for you here. Our new construction homes in Utah are situated in communities of single-family homes, paired villas, and townhomes. We’re building in Farmington, Lindon, and South Jordan. Sego Homes’ floor plans are designed to provide all the features, style, and value you want in a new home.
If you’re ready to move now, look at our selection of quick move-in homes. These are brand new construction homes in Utah, fully covered by the new home warranty.
Reach out to us at Sego Homes and discover the many ways we stand out among home builders in Utah.
