ST. GEORGE — A bill that would allow qualifying senior citizens to defer their property taxes passed the Utah Senate unanimously Monday and heads to the House for consideration. While seen as a way to help older residents keep their homes, members of the Washington County Commission have expressed some concern over the potential size of the tax bill that will be left for whomever eventually inherits the estate.
Property Tax Deferral Amendments, officially designated as SB 25 in the 2022 Utah Legislature, would allow a senior citizen who may be cash poor yet not-so-poor in property to put a pause on their property tax payments until they either die or the property is transferred to a new owner. Once transferred, the previously paused property taxes come due with interest.
Sen. Lincoln Fillmore, of South Jordan, said during a hearing of the Senate Revenue and Taxation Committee held last week that low-income seniors who have lived in their homes for decades can face the possibility of having to sell their homes or take on a second mortgage in order to pay their property taxes.
The bill was originally introduced during an interim legislative session held last year, and while parts of it have been refined since, it found little to no objection among committee members and unanimously passed among those present.
Prior to the committee vote, various groups voiced their support for Fillmore’s bill. Among them were the Utah Housing Coalition, Utah Taxpayers Association and AARP Utah.
Wayne Cushing, Salt Lake County Treasurer, said he supports the bill and noted that while it does what the sponsor wants, it doesn’t do it to the point of abuse.
Applicants for the program must meet certain requirements to be eligible for the property tax deferral.
“The limitations they put in there have significantly narrowed those who would qualify,” Cushing said.
Taylor Throne of Voices for Utah’s Children said the bill shouldn’t apply to seniors only, but also the disabled who may face similar housing worries due to property taxes.
“This is about as close as we can get it to fit the right profile of people that need the relief but not open it up for abuse,” Fillmore said.
Sen. Curtis Bramble, of Provo, said he noticed no one representing property tax recipients – namely school districts and municipalities – were present at the hearing to either support or oppose SB 25.
Utah school districts get up to 50% of the property taxes collected, while the municipalities get 25%, he said.
Fillmore said he has met with the Utah League of Cities and Towns and spoken to the stakeholders involved and crafted a bill that met with the general approval of those involved.
Additionally, the legislation also creates a $10 million restricted account that would be used to help counties and districts with any property tax shortfalls early on. In time, the taxing entities would see an increase on property tax revenue thanks to the interest attached to the deferred payments, Fillmore said.
SB 25 was heard on the Senate floor Monday and passed with a unanimous vote Tuesday. The only question concerning the bill came from Sen. Evan Vickers of City Cedar.
Vickers told Fillmore he wanted to know the difference between SB 25 and the state’s “circuit breaker” program.
Under the circuit breaker program, senior citizens and low-income individuals can have their property taxes abated completely with no way for taxing entities to recoup the loss, Fillmore said. This results in the taxpayers subsidizing the estate and the parties that inherit it.
“This is a superior program because it protects the senior citizens we’re trying to help and the taxpayers that have to pick up the difference,” Fillmore said.
In an email to St. George News, Vickers said he was initially skeptical of the bill due to its not being limited to low-income seniors when introduced last year.
“The bill this year has been drafted to only benefit the targeted population and therefore I felt that I could support it,” Vickers wrote.
While the property tax deferral legislation now moves to the House for consideration, Washington County Commissioner Gil Almquist shared his concerns about SB 25 with St. George News on Tuesday.
“I can tell you its eye-candy to a lot of legislators that feel that is a benefit to many citizens, and there probably will be some who do benefit,” Almquist said. “We’re just not sure how that’s going to bake in the oven. If it comes out bad, I can tell you there will be different legislation.”
Almquist’s concerns leaned toward the potential inheritors of the estate once it is transferred to new hands and the tax bills come due. Having that tax burden can become quite a disadvantage if the new estate owners want to sell the property or divide it up among inheritors, he said.
“It’s theoretical that if somebody for 10 years defers a tax – and they owe $3,000 a year – someone’s going to pay that $30,000 (with interest) because its truly owed back to the taxpayers,” he said.
By way of example, a family that inherits their grandmother’s house with intentions of selling it to help pay for their children’s college education could end up unable to do so as they are surprised with a tax bill for tens of thousands of dollars, Washington County Commissioner Adam Snow said.
Further addressing his vote, Vickers also commented on this issue.
“I recognize the potential challenges to heirs of these properties, but my concern is with those elderly individuals who are struggling meeting property tax obligations when they are asset rich and cash poor,” he said. “I would hope that if an individual or couple choose to take of advantage of this program, they would discuss it with their family so the appropriate planning can take place.”
Ed. note: This post has been updated with a statement from Sen. Evan Vickers.
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