Personal Property Valuation Guidelines
- Other Taxable Personal Property
- Personal Property Exempt From Property Tax
- Guides and Schedules Development and Methodology
Utah Code in Title 59 requires the taxation of property for the funding of local government and Utah schools. Property tax is assessed on both real property and personal property. Generally, personal property used in business is subject to property taxes. Utah law requires business personal property to be reported to the county assessor where the property is located (has situs) on a tax form identified as a Personal Property Signed Statement. Registered motor vehicles and recreational vehicles are subject to Uniform Fees. Personal Property is taxed based on its taxable value as of January 1 of each year. In order to value personal property, the Utah State Tax Commission provides personal property classification schedules which are used by all county assessors in Utah.
Determining Business Personal Property Class
Personal Property is valued using a classification system referred to as “Recommended Personal Property Valuation Schedules”. These schedules identify various types of personal property and provide a “percent good” of acquisition cost for commercial personal property. To determine property type or “class” refer to the Classification Guide. To determine personal property value refer to the Recommended Personal Property Valuation Schedules for each class of property. These valuation schedules provide a factor to be applied to acquisition cost (refer to the Definition of Acquisition Cost below) and acquisition year to determine taxable value. Once taxable value is determined, the local taxing area rate is applied to calculate the tax.
Applying Valuation Schedule to Determine Taxable Value
Taxable value for business personal property classes subject to an ad valorem tax is calculated by applying the acquisition cost at the retail level of trade by the percent good factor of the year acquired.
Definition of Acquisition Cost
Cost of Acquisition must include all costs required to put an item into service. In addition to the cost of the item, include the following costs:
- Freight in, includes shipping costs, loading at origin, unloading at destination, crating, skidding, and other applicable costs of shipping.
- Installation, engineering, rigging, erection or assembly to include foundations, pilings, utility connections and any other costs related to installation.
- Excise and sales taxes.
- Any other costs related to putting personal property into service are to be included in acquisition cost.
Indirect costs such as debugging, licensing fees, permits, insurance or security are not included in acquisition cost.
Definition of an Item of Taxable Tangible Personal Property
An item of taxable tangible personal property means equipment, machinery, furniture or other tangible personal property that is functioning at its highest and best use for the purpose it was designed and constructed and is generally capable of performing that function without being combined with other items of personal property. An item of taxable tangible personal property is not an individual component part of a piece of machinery or equipment but the item of machinery or equipment as a whole. For example, a fully functioning computer is an item of taxable tangible personal property but the motherboard, hard drive, tower or sound card are not.
Registered motor vehicles, recreational vehicles and aircraft subject to state wide uniform fees
Registered Motor Vehicles and recreational vehicles taxed with two types of state wide uniform fees. Passenger vehicles, light duty trucks, off-highway recreational vehicles, street motorcycles, travel trailers, truck campers, personal watercraft, vessels under 31 feet in length and non-commercial trailers are subject to uniform fees based on vehicle age categories. These fees are paid when vehicles are registered or with registration renewal. Heavy duty trucks, commercial trailers and vessels 31 feet in length and longer are subject to a value based state wide uniform fee of 1.5% of taxable value. Motor homes are subject to a uniform fee of 1% of taxable value. The vehicle value is calculated by applying the percent good from the property class published in the Recommended Personal Property Schedules to the vehicle’s “cost new”. These fees are paid at registration renewal. Aircraft are subject to a $25 Uniform Fee. The Aircraft registration fee is .4% (.004) of the “Average Wholesale Value” as listed in the Fall edition of the Aircraft Bluebook Price Digest. These fees are established by statute. These fees are paid to the Tax Commission when the aircraft is registered or at registration renewal.
Supplies on hand as of January 1st are to be valued and assessed at total cost including freight-in. Supplies on hand include: all office supplies, shipping supplies, maintenance supplies, replacement parts, lubricating substances, fuel, and consumable items not held for sale in the ordinary course of business.
Property Leased or Rented from Inventory
Property held for lease or rent or actually leased or rented from inventory on January 1 is subject to ad valorem tax paid to the county assessor. Refer to the appropriate recommended class schedule to determine taxable value. Entities engaged in a combination of direct sales, leases, rental or rent-to-own may exempt only inventory held for sale.
Transitory Personal Property
Transitory personal property includes property that is not in Utah on January 1 but is subject to a proportional assessment paid to the county assessor when it has been in the state for 90 consecutive days in a calendar year. Such property is subject to transitory personal property tax for the period it remains in Utah. (See Tax Commission Administrative Rule R884-24P-65).
Wares and merchandise, held for sale in the ordinary course of business, which constitute the stock-in-trade of any retailer, wholesaler, manufacturer, farmer, or livestock owner, are exempted from ad valorem taxes (UCA Section 59-2-1114)
Farm Machinery and Equipment
Tractors, milking equipment, feed handling equipment, harvesters, storage and cooling facilities, choppers, grain drills and planters, tillage tools, scales, combines, seeders, sprayers, haying equipment and other machinery or equipment used primarily for agricultural purposes are exempt from ad valorem property tax. (UCA Section 59-2-1101). However, the exemption does not include motor vehicles required to be registered with the Tax Commission, as well as machinery and equipment used in processing of agricultural products.
Livestock is exempt from ad valorem property taxation. (UCA Section 59-2-1113)
Property Used for Irrigation Purposes
Property used for irrigation purposes is exempt from property taxation. (UCA Section 59-2-1111) The exemption is limited to the property listed in Article XIII, Section 2 of the Utah Constitution.
Household Furnishings, furniture, and equipment used exclusively to maintain a primary or secondary residence are exempt form property taxation (UCA Section 59-2-1113 and Administrative Rule 884-24P-29).
Personal Property Exempt per Utah Code Ann. Section 59-2-1115
Tangible personal property of a taxpayer is exempt if the property has a total aggregate fair market value of $10,300 or less in 2017. The exemption does not apply to registered motor and recreational vehicles or mobile homes. To apply for this exemption, contact the County Assessor in the county the property is located. An item of taxable tangible personal property is exempt from taxation if the acquisition cost of that item was $1,000 or less and is valued at a percent good of 15% or less in 2017. The exemption only applies to personal property valued by schedules having a percent good residual of 15% or less. Note the definition of an item of taxable tangible personal property in Section I.
Registered Motor Vehicles, Recreational Vehicles and Aircraft
Registered motor vehicles, recreational vehicles and aircraft are exempt from ad valorem taxation and are taxed by uniform fees.
Tax Commission Administrative Rule 884-24P-33 details requirements regarding personal property valuation guides and schedules pursuant to Utah Code, Section 59-2-301. This rule requires that valuation schedules are to be reviewed and updated annually by the Property Tax Division, and must be approved by the Utah State Tax Commission. Analysis of new market data form the basis for revision and updating valuation schedules. The schedules are developed using the following methodology:
- Schedules for Personal Property Classes 1,2,3,5,7,8,10,12,15,16,20,25 and 27 are subject to an ad valorem tax and refer to the Internal Revenue Service (IRS) Class Life to establish average economic life trended to replacement cost new using the Marshall Valuation Service Personal Property Cost Index. Class 13 (Heavy Equipment) is developed from samples of heavy equipment sales. When local property values are not reflected by personal property schedules, assessors may establish market values using other acceptable appraisal methods. According to Tax Commission Administrative Rule 884-24P-33, if such deviation affect an entire class of personal property, the county assessor must submit a written report documenting the schedule changes to the Tax Commission for approval prior to use. The Class 4 Schedule is established by Section 59-2-108 (4) (a) of the Utah Code Ann.
- Schedules for registered motor vehicles and recreational vehicles, subject to state wide uniform fees are developed from samples of vehicle sales as reported in published valuation guides and include: Class 6 Heavy & Medium Duty Trucks , Class 14 Motor Homes , Class 17, Vessels 31 feet in length & longer, Class 21 Commercial Trailers. These classes are subject to “value based” uniform fees.
- The Following Classes are subject to “Age Based” fees set in statute by the legislature: Class 9 Off-Highway ATVs, Class 11 Street Motorcycles, Classes 17a through 17e, Vessels below 31 feet in length, Class 18, Travel Trailers, Class 18a, Tent trailers and Truck Campers, Class 21a, Non-commercial Trailers, Class 22, Passenger vehicles, Class 22a Small Motor Vehicles and Class 26, Personal Water Craft