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Senate approves measure switching property tax "circuit breaker" from forgiveness to deferral
Summary
The Utah Senate passed a bill changing the property tax circuit-breaker program from a forgiveness model to a deferral for qualifying older homeowners, after lawmakers debated eligibility rules, interest rates and concerns about effects on heirs.
The Utah Senate on a voice-verified roll call voted to pass first substitute Senate Bill 197, replacing a property-tax forgiveness program with a deferral option for qualifying homeowners.
Senator McKay presented the measure as a way to preserve homeownership for older residents who lack liquid cash to pay property taxes while reducing the long-term fiscal pressure on counties and other taxpayers. Under the bill as presented, homeowners age 65 or older with household income below $55,000 and household liquid resources below 20 times the base-year property tax who have owned the property at least one year may apply to defer changes above their base year liability. The sponsor said deferrals would carry preferred interest rates (the non-discretionary deferral at about 3.25% and a discretionary, hardship option at about 2.25%), and that counties would be required to notify lienholders to avoid escrow over-withholding.
Supporters described the change as a tool to let low-cash but asset-rich households remain in place without shifting recurring costs onto other taxpayers. Senator McKay said his office worked with stakeholders to refine income thresholds, lienholder notification, grandfathering dates and the statutory definition of a ‘‘transfer’’ so that common estate-planning actions would not unintentionally trigger repayment.
Opponents warned the measure could reduce the inheritance value for the next generation. Senator Reedy said she feared deferral would ‘‘penalize the next generation’’ because deferred taxes would be repaid from proceeds on sale or transfer, shrinking the estate that heirs receive. Reedy said many constituents contact her asking the legislature to help those who are struggling; she said she could not support the bill as written.
Senator McKay replied with a numerical illustration: he described a hypothetical homeowner who undercounts the market value of a home and, under the bill’s deferral, would leave a smaller but still substantial estate; he characterized the policy as preserving the homeowner’s ability to remain in the home while ensuring taxation of an asset eventually occurs.
After debate the Senate approved first substitute Senate Bill 197. The motion to pass was made by Senator McKay; the roll call reflected 15 yea votes, 10 nay votes and 4 senators absent. The measure will be sent to the House for further consideration.
The Senate's action included sponsors’ commitments to continue technical work on income thresholds, the definition of transfer, lienholder mechanics and grandfathering for current program participants.
