2020 Bills

HB 430: Property Tax Deferrals for Home Owning Seniors

This bill never received a vote.

Libertas Institute supports this bill

Staff review of this legislation finds that it is aligned with our principles and and merits support.

It’s no secret that property taxes are one of the most hated taxes. Even after you’ve paid for a piece of property in full, the taxes continue—making some people feel like they’re renting their homes from the government in perpetuity.

A key problem with this scenario is how the property tax inevitably increases over time. When a person takes out a loan to buy a home, usually the mortgage payment stays flat, but the property taxes continue going up. And, of course, when a person finishes paying that 30-year loan, the property tax continues to be owed.

The earning potential for an individual in the middle of their career is much different than that of an older person who has been retired since their mid sixties. Income drops and becomes fixed instead of steadily increasing. This leads to homeowners who are “house rich” and “cash poor.”

And this is where property taxes begin to really take their toll.

Representative Travis Seegmiller is proposing a remedy that involves expanding the use of deferrals to help seniors. Here’s how House Bill 430 works: once a homeowner reaches a certain age, they can request that the county defer their property taxes. Instead of paying each year, the homeowner has a lien placed on their home and the property taxes come due (with interest) whenever the home is sold or ownership is transferred.

This allows the homeowner to avoid being forced out of their home because of the strain of property taxes. When the home is sold or given to heirs, the payment of property taxes becomes part of the transaction.

It isn’t hard to see the similarities between a deferral and a reverse mortgage program. But seniors are often reluctant to engage in a reverse mortgage because they significantly eat into the equity of their property, unlike a property tax deferral. The equity that a homeowner has already built up would not be compromised in most cases by a deferral, because inflation and property value increases will outpace the amount of property tax that would accrue over the life of the deferral.

Counties in Utah are already authorized to use deferrals for property owners who are indigent, but at their own discretion. HB 430 would make deferrals available for anyone who is 66 or older and owns a home valued below $500,000.

Some would argue this is a better solution than simply freezing property taxes or eliminating property taxes for seniors since all other property owners don’t have to bear the weight of supporting someone who no longer pays property tax. Exemptions don’t typically lead to less revenue for government—it just shifts the overall burden to other property owners.

In the end, a deferral doesn’t subsidize anyone, but allows seniors to stay in the home they worked so hard to purchase and pay off.