Estimated read time: 10-11 minutes
SALT LAKE CITY — For homeowners in Utah, it's no typical tax year.
Usually, under the state's truth in taxation laws, if property values all increase at the same pace, homeowners won't notice much of a difference on their yearly property tax bill — unless they're facing a tax hike.
But this year, in the wake of 2021 — the year of relentless and shocking home price increases as the West and the nation's housing market went haywire — is like no other.
County assessors say they've never seen a year like it. And since they're required by the Utah Constitution to assess home values based on market value, they're aware of the sticker shock hitting Utah homeowners when they open their property tax notices.
"We sympathize with them," Tooele County Assessor Jake Parkinson said. "It's unprecedented to see an increase not necessarily because of (proposed tax hikes), but because of your value going up and your piece of the property tax pie getting bigger is frustrating to taxpayers."
This year, it's a double whammy. On top of tax rate hikes 90 taxing entities across the state are seeking, homeowners are indeed seeing unusually high increases to their property taxes — to the tune of hundreds of dollars a year.
Seth Cox is one of them.
When he opened his email to view his 2022 property tax notice for his Lindon home, the number slapped him in the face. And yet, fully tuned into the direction of Utah's housing market over the past several years, Cox said he knew, with dread, the dollar amount was probably correct.
"Everybody's seen home values go up like crazy," he said.
Cox's property tax notice showed his home's full market value went from $624,900 in 2021 to $939,700 this year. As a homeowner, seeing property values go up is mostly a good thing. Anyone would welcome that return on investment — especially in just one year.
But there's an unmistakable downside, especially if you're not planning to sell.
Even without a proposed 24% property tax increase the Central Utah Water Conservancy District is seeking, Cox's yearly property tax is set to go from $3,240 in 2021 to almost $3,868 this year — a $628 difference. If the tax hike passes, he'd be facing about $207 more a year, with a yearly tax bill of over $4,040.
"It's going to make my mortgage payment go up," Cox said with a sigh. As web developer, Cox said he's got a healthy and steady income — but that's a steep hike that his family's household budget will have to absorb.
"I don't think we'll be in dire straits because of this," he said, but added it comes at a time when record U.S. inflation is a "bigger concern for me more than anything."
"It's one more thing, you know," Cox said. "What's going to be the straw that breaks the camel's back? I don't know. But it's just one more thing that keeps getting piled on top."
Cox added he can't imagine how these property tax increases are impacting families on tight budgets — especially retirees on fixed incomes who bought their homes decades ago and likely never fathomed that their home values or property taxes would reach such heights in such a short time period.
"It's going to hurt everybody," he said.
'Sticker shock': Why are property taxes so high this year?
For the past several weeks, as 2022 property tax notices started hitting Utahns' mailboxes and inboxes last month, Salt Lake County Assessor Chris Stavros said taxpayers are indeed experiencing "sticker shock."
And he identifies with them.
"We don't dictate the market, we interpret the market. This is the market forces at play," Stavros said. "Those increases are data supported. ... That's the reality of the market."
The increased tax burden isn't because county assessors are taking advantage of the housing market to rake in the cash for their county governments. It doesn't work that way.
"There is a misperception with taxpayers that the assessor can just increase values to create a windfall of revenue, and that can't happen" because of Utah's tax laws, Stavros said.
How does Utah's truth in taxation law work? Few people can explain it as well as Utah State Tax Commission chairman John Valentine.
"What's supposed to happen," he said, "is if a taxing entity has the same amount of revenue as last year, plus a permitted amount of new growth, then they don't have to have a truth in taxation hearing, but they have to adjust the rates downward if the properties in their taxing jurisdiction go up."
So "as values go up, the rates drop accordingly to produce the same amount of revenue for the taxing entities," Stavros said, excluding revenue from "new growth" or new properties that were built over the past year.
But this year, it's not so simple. "There's some dynamics ... that people should know about," Stavros said.
Value increases weren't evenly distributed across all property types. Because taxing entities' certified tax rate is based on the aggregate, or total number of properties within a taxing entity's jurisdiction, sometimes property owners' tax burden depends on how other properties — not just residential, but also commercial and other property types — fared in the same time period.
Here's where it gets tricky — and why homeowners are bearing the brunt of this year's tax burden.
"What's happening is that house (values) have gone up faster than businesses, industrial property or agricultural property," Valentine said. "Since houses are going up faster because of the hot housing market, industrial properties and commercial properties didn't go up very much, primarily due to, still, the effect of COVID and the slowdown of business."
As Utah State Tax Commission officials have seen revenue numbers reported from taxing entities from across the state, they've seen "this differential occurring where the housing component went up faster than the rest" of other properties, Valentine said.
"So the taxing jurisdiction may not have additional revenue, but it shifts who's paying the tax," he said.
Valentine told the Deseret News statewide figures weren't yet available for review as counties are still in the midst of their tax process for the year, but that's the pattern state tax officials have seen so far as county assessors file preliminary numbers.
So add not just record home price increases but now a jarring tax burden shifted to homeowners to the growing list of consequences from the COVID-19 pandemic's dramatic impact on the housing market.
Zoom in: 'Historic' home value hikes
More than 28%.
That's how much residential properties increased across Salt Lake County in 2022, according to Stavros.
In 2021, the median value of residential properties in Salt Lake County was $435,700. That's up from $388,500 in 2020, $368,300 in 2019 and $339,900 in 2018, according to records provided by the Salt Lake County Assessor's Office.
In 2022? The median value of residential properties in Salt Lake County was $561,100.
That increase — 28.7% to be more precise — is "right in line" with the yearly home price increases that have been reflected on Utah's Multiple Listing Services, or MLS, real estate data, Stavros noted. "We feel that even though we had to increase valuations substantially, they're clearly in line with the market."
That figure is remarkable, Stavros and his chief deputy assessor Tyler Andrus said, noting the last time they had seen those types of value increases was 2005 and 2006, before the housing bubble popped and sent the global economy into the Great Recession. And it shattered those levels.
"The percent increase was 10% more than we've ever seen for residential values in our assessed values," Andrus said. "I mean, it is truly historic."
"This is unprecedented," Stavros said.
Another factor that's "really making this year interesting," Stavros added, is the shift in tax burden from commercial and other property owners to residential owners "because residential values are increasing exponentially more than commercial."
Commercial properties, Stavros said, still increased in value — but by 11.8%, less than half of the rate of residential properties. That has led to a "natural shift" in tax burden to homeowners.
Also don't forget there are 23 taxing entities that are seeing tax hikes in some form, Stavros noted. "So, you know, we have that in play."
Some homeowners, however, might be seeing more — or even less — of an increase to their property tax bill than their neighbors. That could be explained in that they might reside in differing taxing jurisdictions — or if their property value went up less than the median increase. If that's the case, any tax increase would have "little or nothing to do with our assessment" increase, Stavros said. If their value is more than the median, however, assessed value could have certainly impacted their property tax bill.
Now let's hop west over to Tooele County — a rural community that's among the counties that have seen the brunt of Utah's housing boom.
Tooele County is among the Wasatch Front counties with the highest shift to homeowners.
"Real property in Tooele County — residential property — went up (over) 40% last year," Parkinson said, compared to a 13% increase in commercial property on average.
Parkinson pointed to one Tooele County homeowner who has seen their property taxes increase from $1,833 in 2018 (when their home value was about $213,000) up to over $3,000, with a home value of now over $443,000.
"It's almost doubled. And very little of that is actually" because of a tax increase, Parkinson said. "The rest is from tax shift."
The tax shift: By the numbers
Parkinson said he and other county assessors have been tracking — with concern — this year's tax burden shift on homeowners as values have rapidly outpaced other property types. He said he and other Utah assessors have been collecting that information and sharing it with Utah lawmakers to consider potential solutions.
"All options should be on the table so we're considering the impact these taxes are having on Utah families," Parkinson said.
Statewide, the tax burden on real property (which includes residential, commercial and all land and improvements), has shifted from 85% of the state's total aggregate property tax in 2017 to 90% in 2022, according to data county assessors, including Parkinson, have compiled. Business personal property taxes and centrally assessed taxes (which includes taxes on mines, airlines, utilities and railroads), made up 5% and 10%, respectively, in 2017, but that's shifted to 4% and 6%, respectively, in 2022.
"So you're shifting all of that value — boom — to (homeowners)," Parkinson said.
Tooele County saw a 42.2% increase on residential property, according to assessors' data provided by Parkinson. Summit County saw a 42.6% increase. Utah County homeowners' burden increased 38.6%. Davis County's getting a 32.3% increase. Salt Lake County, 26.5%. Down south, Washington County saw a 42.5% increase.
But Wasatch County homeowners have been hit the hardest, with a 48.6% increase.
"The good news is the system is working how it was designed," Parkinson said. "This is what the Legislature wanted to have happen so the taxing entities bring in the same revenue. The bad news is it's hitting taxpayers."
Lawmakers have the option to consider increasing the primary residential exemption — which allows assessors to exempt 45% of the fair market value of a primary residential property — to help soften the shift, Parkinson said.
But that's no quick fix. It would require a state constitutional amendment, which means it would need to be a ballot question for voters. Lawmakers could also consider a different rate for residential properties and other property types.
"Everything should be on the table," Parkinson said.
I can't pay my property tax bill. What should I do?
Both Parkinson and Stavros also urged homeowners to consider filing an appeal if they believe their assessed value is not aligned with the market. The deadline for county-assessed properties is Sept. 15.
They also urged taxpayers in areas that are facing tax hikes to participate in truth in taxation hearings and tell county leaders what they're facing.
Counties also have tax relief programs for struggling homeowners. Go to your county's website or call the treasurer's office for more information. For Salt Lake County taxpayers, more information is available at slco.org/treasurer/tax-relief.