In October, the Association released a report examining the impact of short-term rentals (such as Airbnb) on the state of Utah.
As policymakers have discussed the cost of housing in the state, the question of short-term rentals (STRs) and their effect on housing has arisen. Some have wondered whether STRs are hindering the housing supply by taking homes that might otherwise be available to first-time buyers. Others have suggested that, if included in the pool of homes available for purchase, these properties could actually help lower housing costs overall. We have been particularly interested in their tax impacts on the state and the economic benefits they bring to the communities in which they operate.
With those questions in mind, we worked with our research team to produce a new report addressing these issues and more.
Key findings from the report include that STRs currently pay more than $181 million in property taxes per year statewide. If all of those properties were converted to primary residences, the primary residential exemption would apply, resulting in an $81.5 million tax shift to all other property types. This is a direct result of Utah’s Truth-in-Taxation system. Because taxing entities are guaranteed the previous year’s revenue, all other properties within those entities’ boundaries would need to make up the revenue lost from STRs receiving the primary residential property tax discount.
Another finding from the study shows that STRs generate $1.19 billion in direct visitor spending annually in Utah. This is a significant contribution to the state’s economy, especially for rural areas that rely heavily on tourism.
Regarding housing specifically, the study modeled what would happen if half of the STRs in Utah were converted to residential housing. It found that this change would decrease housing prices by only 0.4%, making a minimal impact on housing affordability statewide. Additionally, only about 19% of STRs are valued below $400,000, suggesting that most STR properties are not priced within reach for typical first-time homebuyers.
You can read the full study here:
https://utahtaxpayers.org/report-short-term-rentals-and-their-impact-on-the-state-of-utah/