Does a part-time Park City homeowner who mainly lives and works in Chicago qualify for Utah's primary residential property tax exemption, and does a landscaper or the homeowner pay sales tax on a tree that's planted at a client's home?

Plain-English summary

This ruling answers two unrelated questions submitted together.

Question 1: Does a part-time Utah homeowner qualify for the primary residential property tax exemption? The individual described mainly lived and worked in Chicago (renting an apartment there) but had purchased an unrented home in Park City, Utah, using it 1-2 months a year and sometimes conducting business from it. Utah Code Ann. § 59-10-103(1)(j) makes someone a Utah resident for income tax purposes if domiciled in Utah for any part of the tax year, and the primary residential property tax exemption similarly requires domicile in the property (Utah Admin. Code R884-24P-52(B)). Domicile means a "true, fixed, permanent home" with the present intention of making it permanent, and it's a factual determination — courts weigh a person's actual activities more heavily than their stated intent (citing O'Rourke v. State Tax Comm'n, 830 P.2d 230 (Utah 1992), and Allen v. Greyhound Lines, Inc., 583 P.2d 613 (Utah 1978)). Rule R884-24P-52(B) lists 17 objective factors relevant to that determination. Based on the limited facts supplied — mainly living and working in Chicago, using the Park City home only part-time — the Commission concluded the individual was NOT domiciled in Utah and would not qualify for the exemption, while noting that a fuller picture of the person's activities could change that conclusion.

Question 2: Who pays sales tax on a tree planted at a customer's home? The Commission applied the standard real-property-conversion rule: a tree becomes real property once installed and affixed in a manner suggesting it will remain for its useful life. Who owes sales tax turns on who buys the tree before that conversion happens:

• If the landscaper buys the tree and installs it, then bills the homeowner one lump sum for the whole project, the landscaper is the last person to own the tree as tangible personal property — so the landscaper pays sales tax on the tree's cost, and the homeowner's charge is not separately taxed.
• If the homeowner buys the tree directly and just hires the landscaper for installation labor, the homeowner pays sales tax on the tree purchase, and the landscaper's installation labor is not a taxable transaction.

What this means for you

Owners of a second home in Utah

Using a Utah property only part of the year, while your real life (work, primary residence) is centered elsewhere, generally won't establish the domicile needed for the primary residential property tax exemption — the analysis looks at your actual pattern of living and working, not just where you'd like to claim residency.

Landscapers, lawn care, and nursery businesses

Structure your billing based on who's buying the plant material: bundle the tree purchase into your own installed price (you pay tax on your cost, no separate tax on your customer's bill), or have the customer buy the tree directly and pay you only for installation labor (customer pays tax on the tree, your labor charge is untaxed).

Accountants and tax professionals

The domicile framework here (facts over declared intent, the 17-factor R884-24P-52(B) list, O'Rourke and Allen) is broadly reusable for any Utah residency question, not just property tax exemptions. The tree-installation rule is a standard real-property-conversion "who's the last owner of the tangible property" analysis, reusable for any planted/installed landscaping materials.

Common questions

Q: If I own a vacation home in Utah but live and work elsewhere most of the year, can I claim the primary residential exemption?
A: Not on facts like these — the Commission requires actual domicile (a true, fixed, permanent home), which a part-time second home generally doesn't establish.

Q: Could more facts change this residency conclusion?
A: Yes — the Commission was explicit that its answer was based only on the limited facts supplied, and a fuller picture of the individual's activities could show Utah domicile after all.

Q: How do I know whether I (the landscaper) or my customer owes sales tax on a planted tree?
A: Whoever buys the tree before it's installed and converted to real property owes the tax — either you (if you buy and bill a lump sum) or your customer (if they buy the tree and just pay you for labor).

Citations and references

Statutes and rules:

• Utah Code Ann. § 59-10-103(1)(j) (residency by domicile)
• Utah Admin. Code R865-9I-2 (domicile definition)
• Utah Admin. Code R884-24P-52(B) (primary residence; 17 domicile factors)

Case law:

• O'Rourke v. State Tax Comm'n, 830 P.2d 230 (Utah 1992)
• Allen v. Greyhound Lines, Inc., 583 P.2d 613 (Utah 1978)

Source

• Landing page: https://tax.utah.gov/commission/rulings/
• Original PDF: https://files.tax.utah.gov/tax/commission/ruling/98-062.htm

Original ruling text

98-062

Response
October 5, 1998

Request

RE: (1) UT
Residency Requirements:(2) Point Sale Tax is Collected and Paid

To Irene Rees:

Question 1

An individual
who rents an apartment in Chicago and works there has purchased a home in Dee Valley
Park City, UT. Currently the individual
is living here 1-2 months out of the year and performing business from the home
in Park City, UT. The house is not
rented. The house is the individuals
only residence. Can the individual
claim UT as their primary residence? In
Park City the residence is given a tax break when it is the primary residence
of the individual. At what point is one
considered a resident of the state of Utah?

Question 2

At what point
should a lawn care individual have tax on a tree that is planted for a
client. Does the lawn care person pay
the sales tax when the tree is purchased?

Does the lawn
care person collect sales tax from the home of the individual?

Is the tree
considered real property when the tree is planted at the home?

Thank you for
your help in this matter.

Sincerely,

NAME

October 5, 1998

NAME

RE: Primary
Residential Property Tax Exemption and Sales Tax on Landscaping Services

Dear NAME,

We have
received your request for an advisory opinion concerning the application of the
primary residential property tax exemption and at what point to collect sales
tax on the sale and installation of a tree.
Let us address each issue separately.

Question
1: Residency and Primary Residential Exemption. Utah Code Ann. �59-10-103(1)(j) provides that an individual is a
resident of Utah for income tax purposes if he or she is domiciled for any
period of time during the taxable year.
For purposes of determining whether an individual is domiciled in this
state, Utah Admin. Code R865-9I-2 provides that "domicile" shall
mean:

(D)
the place where an individual has a true, fixed, permanent home and principal
establishment, and to which place he or she has (whenever he or she is absent)
the intention of returning. It is the
place in which a person has voluntarily fixed the habitation of himself or
herself and family, not for a mere special or temporary purpose, but with the
present intention of making a permanent home.

Determination
of domicile is one of fact. O�Rourke
v. State Tax Comm�n, 830 P.2d 230 (Utah 1992). In determining whether a party has residency under Utah law, a
party�s activities are given greater weight than his or her declaration of
intent. Allen v. Greyhound Lines,
Inc., 583 P.2d 613 (Utah 1978).
Thus, in determining your residency status, the Tax Commission would
look at your actual activities as evidence of your intent instead of your
declarations of intent.

A determination
of domicile is necessary prior to receiving the primary residential property
tax exemption, for Utah Admin. Code R884-24P-52(B) defines a �primary
residence� as the location where domicile has been established. The rule further provides a list of 17
factors or items of objective evidence which may be determinative of domicile
(copy enclosed).

You
have supplied few facts from which to determine the domicile of the individual
you represent. However, based on the
limited information you do supply, it appears that the taxpayer mainly lives
and works out of Chicago and has the Park City home as a part-time, second
residence. Considering only the facts
supplied, we would not consider the individual domiciled in Utah and he or she
would not be entitled to the primary residential property tax exemption.

However,
were all of this individual�s activities known, the totality of factors could
conceivably indicate that your client is domiciled in Utah. In that case, our opinion in this letter
concerning your client�s domicile would be negated.

Question
2: Sales Tax. Enclosed is the Tax
Commission�s Publication 45, Sales Tax Guidelines for Horticultural Specialty
Trades, which should provide sales tax guidance for your lawn care client. These guidelines indicate that a tree is
considered real property upon its installation if it is affixed to the real
estate and installed in such a manner that suggests that it will remain in
place over the useful life of the tree.

Should
your lawn care client purchase the tree and install it, then charge the
homeowner for the entire project, your client is considered the last person to
own the tree as tangible personal property.
As your client has converted the tree to real property, he or she must
pay sales tax upon the cost of the tree.
In this situation, the amount charged by your client to the homeowner is
not subject to sales tax.

On
the other hand, should the homeowner purchase the tree and hire your client to
install it,

the homeowner is considered the last person to own
the tree as tangible personal property and must pay sales tax on the purchase
of the tree. Your client�s installation
service of tangible personal property to real property is not a transaction subject
to sales tax.

Please
contact us if you have any other questions.

For
the Commission,

Joe
B. Pacheco, CPA

Commissioner

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