Salt Lake's effective property tax rate among lowest in nation
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Salt Lake City has one of the lowest effective property tax rates in the nation — a common feature of America's wealthier cities.
By the numbers: The effective property tax rate for a median-valued home in Salt Lake was 0.58% in 2022 — the fifth lowest among the largest cities in all 50 states, Axios' Jennifer A. Kingson reports.
- That's according to a new analysis from the nonprofit Lincoln Institute of Land Policy and the Minnesota Center for Fiscal Excellence.
Driving the news: Property taxes continue to be out of sync with soaring real estate prices in most places.
- The average effective tax rate on a median-valued owner-occupied home fell to 1.32% in 2022 from 1.33% in 2021 across the country's biggest cities, the report found.
The big picture: High property tax rates usually reflect a combination of heavy property tax reliance and low sales and income taxes.
Between the lines: Some cities depend more heavily on property tax income than others, creating a counterintuitive situation in which the cities with the highest effective property tax rates — Detroit and Newark, New Jersey — are among the poorest.
- Wealthy cities like Salt Lake City, Denver and Boston reap revenue from other sources and thus have the lowest effective rates.
What they're saying: The discrepancy in tax rates between rich and poor cities is probably "the hardest thing to get your head around," said Bob DeBoer, research director at the Minnesota Center for Fiscal Excellence.
- "In these large cities where the home values are quite low, they still need to collect enough property tax revenue to run a big city," he explained.
- "Unless their commercial values are high, they're going to need to collect a higher percentage — a higher effective tax rate — than a wealthier city."
What's next: If home values rise — because high mortgage rates keep the supply of homes for sale tight — the effective property tax rate could continue to decline.
- But assessors seem to be getting wise: An analysis by the National Association of Home Builders found that property tax revenue rose steeply in the first quarter of this year, as tax rates started to catch up to home values.