Residents who say Utah's second-home tax rules are unfair are gearing up for a legal challenge.
Under the state's taxing rules, those who own two residences are levied almost 30 percent more for their secondary residences, which include summer cabins, vacation homes and condominiums that aren't rented to others. To qualify as a primary residence, a home has be lived in for at least 51 percent of the year.Among those who are supporting the legal challenge are those who own second homes in Park City and Summit County and those who own cabins in Big Cottonwood Canyon. Many have contributed to the Residential Property Tax Trust Fund that pays a local law firm, Holme, Roberts and Owen, to represent their interests.
"The tax is different for purely arbitrary reasons (on primary and secondary residences)," said attorney David Crapo.
"As long as you are using your property for residential purposes, you are not involved in a transient rental pool, or not involved in commercial (uses) why should you be penalized if you choose to buy a second residential property?" he said.
Recently, the Big Cottonwood Canyon Association has encouraged its members to join the lawsuit effort with a $200 donation. They also tell those who are required to pay higher Salt Lake County taxes to do so under protest. Several hundred cabin owners in the canyon are assessed higher taxes.
It's no surprise that Summit County and other areas with large numbers of vacation homes, including Rich County - home to Bear Lake - and Washington County - which has a large winter retiree population - are likely targets for the group's lawsuits.
During the 1993 Legislature, officials from those areas opposed a bill that would change the law, saying it would decrease Utah property-tax revenues by $1 million. The law was defeated in the Utah Senate.
In Park City, officials have said 60 percent of property-tax revenues come from second homes. In Summit County, 36 percent of property value is considered a secondary residence.
In Salt Lake County the ratio is much lower. Some 2,711 homes are considered secondary residences compared with 195,930 primary residences, according to Lee Brennan with the county assessor's office.
The conflict grows out of a voter-approved Constitutional amendment and ensuing legislation in the early 1980s that granted property-tax relief to homeowners. While voters allowed the Legislature to enact up to a 45 percent exemption on residential property, the current exemption is set at 29.5 percent. However, follow-up legislation didn't give a second home the same break as a "primary" residence.
Summit County Auditor Blake Frazier said changing the rules goes against the Legislature's original intent of providing tax relief to encourage home ownership. Reducing taxes for second homes would result in a tax shift to those who own a single home.
"If you change the primary residence rules you should tax everybody at 100 percent," Frazier said.
Proponents of the change agree a tax shift is necessary, but say a yearly tax increase ranges from cents in some counties to less than $20 in others. Crapo says that's worth the equity and message it sends to out-of-state owners.
"They are killing the goose the killed the golden egg for a pittance," Crapo said.
Opponents of the change have characterized the fight as one that will benefit the rich, particularly wealthy out-of-staters who own Utah vacation homes.
Dick Hadfield, who owns a home in Salt Lake City and a cabin in Big Cottonwood Canyon, said that's only part of the story.
"They're looking at the Johnny Carsons. (Carson owns a home in Deer Valley). People up in Big Cottonwood Canyon are working class-people who built these cabins for their families," he said.