Some states have more affordable property taxes than others. Where does Utah rank?
One of the prices you pay for having a roof over your head, whether you rent or own, is paying property taxes. When calculating property tax, the assessed value of your home is multiplied by the tax rate, which is set by the local tax authority:
Assessed value x tax rate = property tax.
“However, it is important to understand that the assessed value of a home is often not the same as the price you paid for the home,” according to Redfin. “Depending on your area, the assessed amount can be wildly inconsistent with how much you would make if you sold your home.”
A study by WalletHub found that the average home tax expense in the United States is $2,869 yearly.
States with lowest property tax rates:
Hawaii — .27%.
Alabama — .39%.
Colorado — .49%.
Nevada — .50%.
South Carolina — .53%.
States with the highest property tax rates:
New Jersey — 2.33%.
Illinois — 2.11%.
Connecticut — 2.00%.
New Hampshire — 1.89%.
Vermont — 1.78%.
Utah has the sixth lowest property tax rate in the country at .55%.
Should you consider property taxes when moving?
Because property taxes vary by state, they can be factored in when individuals or families are deciding where to live but don’t generally act as a make-or-break situation.
“People generally do not directly consider property taxes when they move. They generally consider jobs, family, and lifestyles. Lifestyles in turn are affected by the overall cost of living and cost of buying a house so people arguably do indirectly consider property taxes somewhat,” Valrie Chambers, associate professor of taxation and accounting at Stetson University, told WalletHub.
“Taking property taxes as one factor is wise, but should be taken in context. For example, California and lately Florida are high-cost real estate localities. Florida’s property taxes are much lower, but insurance is much higher, so payments tend to even out,” Chambers added.
According to Redfin, due to several factors, homeowners today stay in their homes two times longer than people in 2005.
One reason is that “Some state tax systems have policies that make it financially beneficial for people to stay in their homes as they get older. Texas homeowners over 65 can defer property taxes until the home is sold, and in California, Proposition 13 limits property-tax increases.”
Related
New report shows the effect of job market and workforce shortages by state. Where is Utah ranked?
From Gen Z to the baby boomers, 2023 was bad when it came to housing
Property taxes in Utah
There are 1,151,414 housing units in the state of Utah, the U.S. Census Bureau reported, with an average median income of $89,168.
According to Redfin, Salt Lake County is unique in the sense that homes are assessed every five years, “but the county annually looks at the sales prices for each neighborhood and adjusts its valuation for each home annually, to make sure it tracks with the market relatively closely.”
Utah is also unusual regarding its tax system because its property taxes don’t always fluctuate due to a property's value — this is due to tax shifts.
“Tax shifts result from broad changes in assessed values. Assuming there’s a 10% value increase across the county, a property with a 5% value increase could experience a decrease in taxes,” per Doorloop. “However, some homeowners will inevitably see a reduction in their property’s assessed value but an increase in their taxes.”
“This happens because assessed values change in different regions and across multiple property classes throughout the county, creating a tax shift,” Doorloop added, emphasizing that each situation can vary.
