The Ultimate Guide to Utah Real Estate Taxes

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By Luke Babich Updated October 22, 2021


Learn your tax responsibility when buying or selling a home in Utah. Discover the difference between property taxes and real estate transfer taxes. See who you can turn to for assistance with this complicated process.

The Ultimate Guide to Utah Real Estate Taxes

Most of us do not like it when April 15 approaches each year. Taxes are not fun to prepare. They are not fun to pay. They are not fun to read about.

If you enjoy discussing taxes, then there might be something a little off about you (or you’re a great accountant).

As adults, we sometimes have to do things that we aren’t crazy about doing. If you are a resident of Utah, read on to learn about real estate taxes and how they affect your bottom line.

Will You Have to Pay Taxes When You Sell Your Home in Utah?

Are you selling your home? If so, you are probably already planning on what to do with the profit from the sale.

Perhaps you plan to use the money to put a down payment on a new home. Maybe you’re ready to downsize, and you are going to go on a few trips with the proceeds before paying cash for a small condo in a retirement community. Regardless of your plans, you want to be able to keep as much of the money as possible from the sale of your home. You want to avoid giving some of your profit to the U.S. or Utah state governments. Is this possible?

The good news is that unless you make more than $250,000 on the sale of your home, you probably won’t have to pay taxes on the profit. If you are married and filing jointly, you won’t have to pay taxes on the sale of your property unless you make more than $500,000 on the deal.

To qualify for this tax exemption, you will have needed to have owned and lived in the house for at least two years. During those two years, you could not have received an exemption on your taxes on the sale of another property.

Does this make you happy? It should.

At the risk of being a downer, keep reading. Your tax responsibility is far from complete.

How Much Are Real Estate Transfer Taxes in Utah (and Who Pays Them)?

If you have bought or sold a home before, you know that there are all kinds of extra taxes and fees collected during the closing of the house. One of those taxes that you may not have noticed before is the real estate transfer tax.

States, counties, and cities can charge real estate transfer taxes when a piece of real estate is bought and sold. Usually, the taxes are based on the percentage of the purchase price of the property.

Most states collect these taxes. Up until recently, Utah was the exception. This may be changing.

Currently, the Utah Republicans are suggesting that a transfer tax will generate $18 million for the state’s coffers.

The proposed tax would be .075% of the purchase price of the home. It is not clear whether the buyer or seller will be responsible for paying the tax.

The proposed tax will not apply to family members who are transferring a piece of property to other members of the family. The proposal also states that the tax will not be collected during refinancing.

To learn whether or not Utah passed the real estate transfer tax, reach out to a local real estate agent. Your agent will be able to discuss the amount you will need at closing to cover all the fees and taxes required from the purchase or sale of a Utah home.

How to Calculate Property Taxes in Utah

If you own a home in Utah, you have to pay property taxes.

Property taxes are collected from homeowners each year to help fund schools, fire departments, libraries, and other local services.

The amount of property tax you are required to pay usually depends upon the value of your home. How is this value determined?

Usually, the local assessor will compare your property to other homes similar to yours that have recently sold in your area.

If there are no other properties in the area similar to yours, an assessor could figure out the approximate cost of replacing your home if it was built today. Of course, if your home is older, the assessor would figure in the cost of depreciation. Older homes are not worth as much as newer homes. Also, the value of the land would be factored into the amount as well.

Once assessors determine the value of your house, the property tax percentage is multiplied by the home’s value.

For example, if your Utah property is assessed for $238,300, and your state property tax rate is .66%, you will have to pay $1,576 per year in local taxes.

If you have a mortgage, your mortgage company will collect your property tax money each month. You may not even know how much you send every month will be for the payment of your loan and how much will be the payment of your taxes. The mortgage company then pays your local government the money you owe.

If you do not have a mortgage, you can send your property tax payment into your local tax authority on a monthly, semi-annual, or annual basis.

The amount your local government collects in property taxes makes a difference on your monthly finances.

For example, Utah has the 11th lowest property taxes in the country.

If you lived in New Jersey, the tax rate is 2.44%. That means if your home is worth $321,100 (which is the average home value in New Jersey), you will pay $7,840 per year. Your tax bill will be $653.33 a month.

Your average-priced Utah residence will cost you $131.33 per month.

As you can see, property taxes make a tremendous difference in your monthly budget. When you are purchasing a home, make sure you understand how much money you will be spending each month on local taxes. This will differ from region to region within the state as well.

Tax Breaks for Utah Home Buyers & Sellers

With all this discussion on how much money you will spend on taxes when you buy, sell, or just own a home, you may feel relief in knowing that there are tax breaks and credits given to buyers.

First off, if you are a first-time home buyer, you could qualify for a tax credit. Talk with your buyer’s agent and mortgage provider to see if you are eligible for this break.

You also may be able to deduct the amount you pay in interest on your mortgage each year. This may change from year to year. Your tax preparer or accountant should be able to tell you whether or not you qualify for this deduction. You can also find out if you are eligible for this deduction if you use online tax preparation software.

According to the State of Utah’s website, a residential property that serves as the primary residence is only taxed at 55% of the fair market value. To see if there are any exemptions to this rule, reach out to a Clever Partner Agent in your area.

Tax Breaks and Write-Offs for Sellers

There are other tax breaks that homeowners should be aware of relating to owning a home.

You could qualify for a deduction if you spend money to prepare your home to be sold. Usually, you need to complete the repairs within 90 days of your closing date.

Finally, if you are an active duty military member, you could deduct moving expenses.

Although this article intends to explain your tax responsibilities and breaks for residents of Utah, the amount you are required to pay can vary from region to region, or county to county.

Before making any decisions on the buying or selling of property, reach out to a tax professional or an accountant to help you determine what your tax responsibility will be.

Your Clever Partner Agent will also help you understand your tax situation, whether you are selling a home or buying a home. To find one of the best agents in Utah, fill out the form on our website, and someone will reach out to you to answer all your questions.

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