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State & Local Taxes

Lesson 2 – Three Primary Taxes, Property Tax

Property tax is one of the primary sources of revenue for local governments. This includes counties, school districts, cities, towns, and special districts. Special districts include water, sewer, fire, and cemetery districts. Property taxes are used to fund local services such as:

• Fire and police protection
• Libraries
• Jails
• Schools
• Road repairs

Even though authorized by law, the State of Utah does not raise revenue through property taxation.

Tangible, real and personal property are subject to taxation in the state of Utah, unless it is expressly exempt by law. Property taxation is administered so that all property bears its fair and equitable burden of the costs of government.

All property is taxed at a uniform and equal rate based upon its fair market value, which must be established as of January 1 each year. The county assessor determines the fair market value and taxable value of an individual’s property. The fair market value is simply the price that would be paid in the open market.

The taxable value is the value against which the tax rate is levied to compute the taxes due. For most categories of property, the fair market value and the taxable value are identical. However, the Utah Constitution allows the Legislature to exempt up to 45% of the fair market value of primary residential property. So the taxable value on primary residential property is 55% of the fair market value.

Example

Certain agricultural property may be taxed upon its productive value as opposed to the value that might be paid by a willing buyer. If agricultural property qualifies for this treatment, it is valued based upon its capacity to produce agricultural products.

County assessors must establish values for locally assessed property and notify property owners by July 22. A property owner has the right to appeal the county assessor’s property value by filing an appeal with the County Board of Equalization. If the property owner disagrees with the decision of the County Board of Equalization, he or she may appeal to the Utah State Tax Commission.

Taxing entities use the assessed value of all properties within their legal boundaries to determine revenues in developing their budgets for the year. Taxing entity annual budgets are used to determine the actual tax paid by a property owner. The tax is calculated by multiplying the taxable value by the tax rate.

Example

The taxable value is 100% of fair market value of property (except primary residential and agricultural properties). The tax rate is determined by taxing entities (counties, cities, special districts, etc.). A taxing entity determines their tax rate by dividing the budgeted property tax revenues by the value of all taxable property within the legal boundaries of the entity.

There are four types of statutory tax relief for property owners:

1. Disabled veterans and their unmarried surviving spouses and minor orphans are eligible for an exemption. The amount of the allowed exemption is based upon the percent of disability, as certified by the Veterans Administration.
2. A blind exemption is available to the visually impaired and their unmarried surviving spouses, and minor orphans. Eligibility is based on very specific requirements of visual impairment as certified by an ophthalmologist.
• Note: Applications for the veterans and blind exemptions must be filed with the county auditor on an annual basis (residents of Salt Lake, Rich, and Cache Counties file with the county treasurer).
3. The circuit breaker program provides a tax credit to persons 65 years of age or older, or to persons under 65 if they are a surviving spouse and meet certain income requirements. To qualify for the credit, an individual must own or rent their primary residence.
4. An indigent abatement or deferral grants property tax relief on the residence of an applicant. The applicant must be 65 years of age or older and reside in the residence at least 10 months during the year. To qualify, household income must be less than an amount specified by the Legislature. Applicants under 65 may qualify if they are disabled or in circumstances of extreme hardship and meet certain income requirements.

Students who want to pursue a more in-depth study of Utah property taxes may do so by going to the Utah State Tax Commission's Property Tax website. You will find information such as statistical reports, a discussion of approved tax rates, standards of practice used to ensure uniformity and equality in the administration of real property assessments, and a thorough discussion of centrally assessed property, personal property and real property taxation.