Primary Residential Exemption

Residential properties that are occupied full-time by the owner or tenant may be eligible to receive a property tax exemption of 45% of market value. A qualifying property is assessed and taxed based on the remaining 55% of market value. The exemption applies only to the qualified improvements and up to one acre of land. In order to receive the exemption the owner must apply.  To download or print an application click on the following link.  Primary Residential Application 

 

The exemption is limited to one per household. If a household occupies more than one residence during a given year, the assessor determines which one qualifies as the primary residence. In making that determination, the assessor consults Administrative Rule R884-24P-52.  

 

Below is an example of the effect the primary residential exemption can have.  For the example we will assume the subject property is 1 acre in size, has a total market value of $250,000 and a tax rate of 1%.

 

Example of property tax without residential exemption:
$250,000 market value = $250,000 assessed value
$250,000 assessed value x 1% tax rate = $2,500.00 property tax
 

 

Example of Property tax with residential exemption:
$250,000 market value x 55% taxable portion = $137,500 assessed value
$137,500 assessed value x 1% tax rate = $1,375.00 property tax
 

 

Short term rentals, vacation homes, time-shares, or other types of transitory housing do not qualify for the exemption. 

 

IMPORTANT UPDATE: Utah Legislature updated the primary residential exemption law with 59-2-103.5(8), this change was effective on 05-14-2019.

 

59-2-103.5(8)(e)(iii) states: "if a property owner or property owner's spouse claims a residential exemption under Utah Code Ann. §59-2-103 for property in this state that is the primary residence of the property owner or the property owner's spouse, that claim of a residential exemption creates a rebuttable presumption that the property owner and the property owner's spouse have domicile in Utah for income tax purposes.  The rebuttable presumption of domicile does not apply if the residential property is the primary residence of a tenant of the property owner or the property owner's spouse."

 

Question: What does this property tax exemption have to do with Utah state income tax?  If you receive the primary residential exemption on a property in Utah, there is a rebuttable presumption that you are domiciled in Utah for income tax purposes.  Put simply, your worldwide income may be subject to Utah state income tax, unless you establish otherwise.  This would primarily effect individuals (or their spouse) who live out of state but own residential property in Utah.  Individuals in such circumstances or believe they could be effected may wish to seek advice from a income tax professional.

 

References:

Utah Constitution Article III, Section 3 

Utah Code Annotated 59-2-103

Utah Code Annotated 59-2-103.5 

Kane County Code 1-10-3