Living in Utah is desirable for many different reasons. From our world-class ski resorts and outdoor recreation, to our proximity to iconic national parks and exceptional family-friendly communities, living here is about as idyllic as it can get.

When you buy a home in Utah, you’re likely looking for a lifestyle change. You want to be close to nature and have easy access to outdoor recreation. But owning a home in Park City, and Utah as a whole is more than just hiking, skiing, and dining out (although, let’s be honest, these things are a pretty big part of it!)

As a homeowner, you have to think about mortgages, property insurance, taxes, bills, and more. In this post, we’re breaking down taxes – the Utah capital gains tax in particular.

Only Two Things in Life Are Certain

As the saying goes, “Only two things in life are certain: death and taxes.” Beyond the breathtaking natural wonders all around, Utah has a lot to offer homeowners. In general, taxes in Utah are on the low end compared to the rest of the United States.

Income tax in Utah is about 4.55% (as of 2025), one of the lowest rates in the country.

At the same time, property taxes tend to be lower here, too. For a primary residence, expect to pay about 0.5% of the assessed value in tax. For secondary homes, property taxes go up to 1% of the assessed value.

When you live, work, and own property in Utah, these are just a few of the taxes you’ll pay each year. However, when the time comes to sell your home, you might be subject to capital gains.

What is Capital Gains Tax in Utah?

When selling a “capital asset” such as property or stocks, you are charged tax on the profits of the sale. Unlike other types of taxes, capital gains only apply when an asset is sold. For the purpose of this post, we’ll be talking about capital gains and the sale of a home.

The amount of capital gains you pay in Utah is dependent on numerous factors, and as with any financial decisions, it’s always best to consult with an accountant for a more accurate look at your unique situation.

Thinking about selling your home in Park City? Here are a few posts you might find helpful:

• Do You Need to Stage a Home to Sell it in Park City?
• Selling Your Park City Home with Discretion
• How Much Does it Cost to Sell a Home in Park City?

How Much is Capital Gains Tax in Utah?

In Utah, there are two components to capital gains. Taxes are charged both federally and at the state level. The national capital gains rate is 20%. In Utah, the rate can also be up to 20%; however, the actual number could depend on several factors and deductions, including your income level, cost basis, marital status, capital improvements, the type of property you are selling (secondary vs. primary), and more.

Once all these factors and deductions are considered, you’ll have a better idea of the total capital gains you must pay.

With so many moving parts and unique circumstances, it’s best to consult with a professional accountant.

What Does Cost Basis Mean?

When calculating capital gains on a property, it’s essential to know what the cost basis is. In tax law, cost basis is essentially the original cost of a property. For example, if you purchased a property in Park City 25 years ago for $350,000 and the home is now worth $1.5 million, your cost basis would be the $350,000.

Curious about the strategic side of real estate investing? Here are some more posts you might enjoy:

• Does the Stock Market Affect the Housing Market in Park City?
• Stocks Vs. Luxury Real Estate: What’s the Better Investment?
• What are the Tax Implications of Owning a Vacation Home

How Does Income and Marital Status Impact Capital Gains Tax in Utah?

Depending on your income level, you may fall into a different tax bracket for capital gains. Someone with an annual income of $100,000 per year would pay less than someone with an annual income of $1 million.

Married couples and single individuals can also qualify for a capital gains deduction. For example, if you are married, the deduction is $500,000. For an individual, it’s $250,000.

Why It’s Important to Track Capital Improvements

In real estate, a capital improvement is something that improves the overall life of the building. For example, a new roof or an addition would count as a capital improvement, while things like maintenance and repairs would not.

As a homeowner, it’s essential to keep track of your capital improvements over the years. Save all paperwork and documents on the work so when the time comes to sell, everything is together.

Capital Gains on Different Types of Properties

There may also be differences in capital gains paid on a primary home vs. a secondary home. For example, the primary residence exclusion allows sellers to keep a “substantial portion” of the profit from the sale of a primary property if they’ve lived in the home for at least two out of the past five years.

Calculating Capital Gains Tax in Utah

Once you’ve considered factors like your cost basis, capital improvements, income, and exclusions, you can figure out the total gain that is subject to tax. This is also where working with a professional accountant becomes even more beneficial.

While there is no way to completely avoid paying capital gains when selling your property, an accountant or financial advisor can help you maximize exclusions with investing strategies. From 1031 exchanges to investing profits in your 401K, there are numerous strategies you can employ to manage your investments and profits.

Although there are a plethora of online capital gains tax calculators, for all your tax-related questions, it’s best to consult with a professional accountant who is familiar with your unique situation and goals.

For all your home buying and selling needs in Park City and Deer Valley, it’s best to work with an experienced real estate team.

Here at CFH, we’ve been helping homeowners navigate the Park City real estate market for over 30 years. Get in touch with us today to see how we can help with your next purchase or sale.

Call us at 435-647-8035, email us at info@CFHparkcity.com, or fill out the form below to get in touch.