Utah may defer hikes in seniors' home tax

A group of state legislators is looking to give Utah senior citizens the option of deferring annual increases in residential property taxes until they sell their home or die.

"We want to deal with the specter of seniors forced out of their homes by rising property taxes," said Sen. Curt Bramble, R-Provo.

Bramble is co-chairman of the Legislature's Revenue and Tax Interim Study Committee, which heard a draft bill Wednesday that, if adopted in the 2007 Legislature, would join Utah with 24 other states that currently have a property tax deferral program.

Utah currently has a "circuit breaker" program that can help poorer senior citizens with their property taxes.

But a plan pushed by Sen. Howard Stephenson, R-Draper, and other legislators would be available to every senior citizen age 65 or older, regardless of their income, home value or amount of yearly property tax.

Property taxes are going up in many Utah communities. A handout to the committee showed that in 2006, 81 taxing entities increased their property taxes. That is 11.63 percent of all property taxing entities in the state — a 20-year high.

The bill discussed by committee members would not defer a senior's total property tax payment. Rather, it would defer the property owner's increase in property taxes from one year before they apply to the special program to the final year they pay property taxes before they sell their home or die.

Upon death, the senior citizen's heirs would sell the property and/or deal with the deferred property tax bill, which would include annual interest of around 6 percent.

One of the arguments against such a broad-ranging property tax deferral program is that it could financially hurt the property taxing entities — the counties, cities, school districts and special improvement districts.

But Stephenson has a solution: Set up a commercial-based deferral pool fund. Local financial lenders would band together, county by county, to set up and fund the pool. Senior homeowners would borrow money to pay their property tax increases from the pool, and upon selling their homes or their death the seniors or their heirs would pay back to the pool the borrowed money plus interest.

A senior citizen could easily opt into the pool, and then the pool would pay the senior's annual increase in property taxes. Upon selling the house or death, the senior would pay back to the pool those property taxes with interest.

"All taxing entities would be blind to whether someone in their district were getting the deferral or not — they would be held (financially) harmless," said Stephenson.