A few weeks ago I shared the median price of homes for sale in our surrounding states. What I didn’t mention was the huge range in property tax assessments in this country. The average jump in taxes on your home, condo, duplex, etc. was 3% in 2022 over the previous year averaging $3,901 annually in the U.S.
Where do property taxes go? There are several types of taxes collected in our state: income tax, sales tax, property tax, excise taxes on tobacco sales and alcohol, gas (auto) tax and taxes on oil, gas and mining. They are collected by the county where you live and mainly go to support public and higher education and to support individuals with a disability. What is NOT taxed are properties owned by the Feds, the State, and churches. Also, you don’t get taxed on what’s inside your home (furniture), your business inventory and farm machinery and equipment. What I’m talking about here is property tax which is based on an assessed value of all tangible property someone owns, including land and structures. Each county in the state may have a different tax rate that is passed on to property owners.
Any ‘taxing entity’ who wants to increase property taxes over the previous year must by law give specific public notice and hold public hearings before increasing taxes. The County Assessor where you live appraises residential and commercial properties and Utah’s average effective property tax rate is .52%, which is one of the lowest in the country. Basically, the tax law states that you get a 45% property tax exemption on most homes in Utah, meaning you only pay property taxes on 55% of your home’s fair market value as determined by the Assessor and its computer programs. That exemption was raised to 45% in 1995 and has stayed the same for decades. If you are building a home you can qualify for a primary residential exemption before it’s completed if you apply to the County Assessor. Some folks who like to avoid taxes for nefarious reasons file that they are building a home, and never ever complete it but may still be living in it.
Also, to avoid capital gains when selling a personal residence, know that you have to live in the property for two out of the past five years. If you’re single, you can deduct a $250,000 gain (profit) before you must claim capital gains and $500,000 if you’re married. Married couples living apart can’t claim two exemptions unless they are legally separated.
New Yorkers pay the highest property taxes (@$9000 per year), followed by San Jose and San Francisco. Alabamans pay the least-a median of $995 annual followed by New Orleans and Memphis, Tenn. Most homeowners opt to have property taxes paid with their monthly mortgage and are due in full by Nov. 30th each year and cannot be paid during the month of December.