What a Utah Overlap Actually Costs
Program and regulatory figures verified September 25, 2026. Details change; confirm your scenario with us.
Work the three numbers in order. The payment on the house you are leaving, what its taxes do under Utah's exemption rule, and what the rent is allowed to offset.
Step one: the departing PITIA
Principal, interest, taxes, insurance and any HOA or association dues on the home you are leaving. Get this exact rather than approximate, because every other test is measured against it.
Step two: the exemption question
Utah Code 59-2-103(3) reduces residential taxable value by 45%, so a qualifying home is taxed on 55% of market value. Subsection (6)(a) allows that on one primary residence per household.
Take a departing home with a market value of $500,000 as an illustration. With the exemption it is taxed on $275,000. Without it, on $500,000. The difference in taxable value is $225,000, and whatever your county's rate produces on that difference is a monthly number inside the PITIA above. Under (6)(b)(ii) the exemption survives if the home becomes a tenant's primary residence.
Your county assessor administers this under 59-2-103.5, and rates vary by taxing district, so ask them for the figure rather than relying on an estimate here.
Step three: the rental offset
Under Fannie Mae B3-3.8-05, take monthly gross market rent, multiply by 75%, subtract the departing PITIA from step one.
- Positive: the departing residence's payment is offset. It stops counting against you. Nothing more.
- Negative: the shortfall is added to your debt-to-income ratio.
Note that step two feeds step three. Keeping the exemption lowers the PITIA you are subtracting, which makes a positive result more achievable at the same rent.
Step four: reserves
If you have less than 12 months of property management experience, six months of the vacated home's PITIA, in addition to any reserves required for multiple financed properties.
And the ceiling
Check the county limit before any of this. Utah's 2026 one-unit conforming limit is $832,750 in 25 of 29 counties and $1,150,000 in Summit and Wasatch. Above the applicable limit you are on investor guidelines instead of the rules above. See the jumbo page.
Structures on the structures page, the exemption on the exemption page, the rent rules on the Form 1007 page.
Frequently asked questions
How do I estimate what Utah's residential exemption is worth on my home?
The exemption reduces taxable value by 45%, so a qualifying home is taxed on 55% of market value. On a $500,000 home that is the difference between a $275,000 and a $500,000 taxable base, a $225,000 swing. Your county applies its own rate to that difference, so ask your assessor for the dollar figure.
Does keeping the exemption change how much rental income I can use?
Indirectly, yes. The offset calculation is gross rent times 75% less the departing residence's PITIA, and taxes are part of PITIA. Preserving the 45% reduction lowers that PITIA, which makes a positive offset achievable at the same rent.
What reserves should I plan for on a Utah move-up?
For a rental conversion with less than 12 months of property management experience, six months of the vacated property's PITIA, plus any reserves required for multiple financed properties. Bridge structures tier reserves against local marketing time instead.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content about financing, not a loan commitment and not legal, tax, or real estate advice. Utah's residential exemption is administered county by county under Utah Code 59-2-103.5, and eligibility depends on your facts; your county assessor, your CPA or a Utah attorney, and your real estate agent each handle their own part. Loans are subject to borrower and property qualification.