The residents of Carbon County in Utah will soon start receiving their annual notice of property valuation and tax changes. While the tax rate and county budget remain unchanged, the market value of homes in the area has been on the rise, leading to an increase in the taxable value of properties. This, in turn, may result in changes to property taxes for both residential and commercial properties.
According to realtor.com, the median sale price of a home in Carbon County has increased by approximately 65% from April 2020 to April 2022. As the sale prices of homes continue to climb, so does the market value of properties. This increase in market value affects the taxable value of homes and, consequently, the payable taxes for homeowners.
To better understand why the taxable value is changing, it is essential to grasp a few key concepts: property tax revenue, the impact of the local real estate market on home values, and how the local assessor utilizes this information to determine taxable values.
Property taxes play a critical role in providing revenue for governmental taxing entities, such as counties, cities, school districts, and water conservancy districts. These entities rely on property taxes to fund their annual budgets. There are three broad categories of taxpayers in terms of property taxes:
- Centrally assessed: This category includes commercial properties that cross state or county lines, such as railroad companies, mining companies, utility companies (telecom providers, power companies), and cell phone providers.
- Commercial: Besides real property taxes on business and land, this category includes the assets used in the day-to-day operations of commercial entities. It also covers unattached personal property.
- Residential: This category encompasses primary homes, secondary homes, and unoccupied residential properties.
Each of these property taxpayers contributes to the annual property tax revenue. However, the proportions may shift due to various factors, such as changes in business activity or fluctuations in home sale prices. While the overall size of the revenue pie remains the same, the burden of taxation may shift between the categories to maintain the revenue for taxing entities.
In Carbon County, the centrally assessed portion of the tax base has been declining over the years. Industries that were once prospering, such as mining, natural resources, and power plants, have experienced a downturn. Consequently, more tax burden falls on commercial and residential taxpayers to compensate for the decline.
The real estate market plays a significant role in determining a property’s value. The fair market value is the hypothetical price at which a property would sell on the open real estate market. An effective method to determine a property’s market value is to examine the sale prices of similar homes in the neighborhood. With supply and demand driving up home prices in Utah, the market value of properties, including those in Carbon County, has risen.
To establish the taxable value of residential properties in Carbon County, the county assessor is required to appraise them at a range between 95% and 105% of the fair market value. If the assessed value falls outside this range, the state mandates an adjustment to align it accordingly. Additionally, certain portions of the fair market value may be exempt from taxation under Utah law. Primary residences are taxed at only 55% of their fair market value, while secondary and unoccupied properties are taxed at 100% of their fair market value.
For the 2022 tax year, the recent surge in fair market values of residential properties in Carbon County has led to an increase in taxable values. Homeowners will see these changes reflected in their notices of property valuation and tax changes.
If you have any concerns about the assessment or determined value of your property, or if you have questions about your notice of property valuation and tax changes, you can access additional tax information on the Carbon County website (www.carbonutah.com). For further assistance, reach out to the county assessor’s office or the clerk auditor’s office.
By understanding the factors influencing property valuation and tax changes, residents of Carbon County can navigate the tax process more effectively. As the local real estate market evolves, it is crucial to stay informed about how these changes may impact property taxes. Stay proactive and stay informed to ensure compliance with tax obligations and make informed decisions regarding property ownership in Carbon County.