Life Event·Updated October 13, 2026
Tenant in place or empty, the tax you'll owe on a home you never lived in, the 1031 clock, and the nightly rental question that decides who your buyer is.
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Check my home’s value →The duplex in Dixie Downs, the condo near the university, the townhome in Washington Fields you bought in 2019 because everyone was. Whatever the reason for selling, a rental is a different sale from a home you live in, on three fronts: the tenant, the tax, and the question of who your buyer even is. This isn’t legal or tax advice. It’s the map.
Utah law sets the ground rules. You owe the tenant at least 24 hours’ notice before entering for a showing, an inspection, or an appraisal. A fixed term lease survives the sale: the buyer takes the property subject to it and is bound by its terms until it ends. A month to month tenancy can be ended with 15 days’ written notice. And the security deposit transfers to the buyer at closing, with the tenant told in writing who now holds it.
The practical question is who you’re selling to. An investor buyer likes a paying tenant and will price the property on its rent. An owner occupant, which in this county usually means a retiree paying cash for a single story, wants it empty, clean, and theirs on closing day, and will pay more than the investor because they’re buying a home, not a yield. A tenant occupied house with 24 hour showing notice and someone else’s furniture in the photos sells slower and for less to that second buyer. If the lease ends within a few months, waiting usually pays. If it doesn’t, a modest incentive for the tenant to cooperate with showings, or to leave early, is often the cheapest fix on the table.
The exclusion that lets homeowners skip tax on $250,000 or $500,000 of gain requires that you lived in the house two of the last five years. A pure rental doesn’t qualify. A former home you converted might, partly, depending on when you moved out. Everything else is taxable, and it comes in two pieces.
The first is depreciation recapture. Every year you owned the rental you deducted, or were entitled to deduct, a slice of the building’s cost as depreciation. When you sell, the IRS taxes that accumulated amount at up to 25%, whether or not you actually took the deduction. The second is the gain above your adjusted basis, taxed at the long term capital gains rate, 0%, 15%, or 20% depending on your income that year, plus the 3.8% net investment income tax for higher earners. Utah then takes its flat 4.45% on all of it, recapture and gain alike. There’s no state discount for capital gains.
The number that decides all of this is your basis, and in a non disclosure state the deed you recorded doesn’t show what you paid. Your settlement statement does, and so does your depreciation schedule. Find both before you list.
A 1031 exchange defers the whole bill, recapture included, if you roll the proceeds into another investment property through a qualified intermediary. The deadlines are strict: 45 days from closing to identify the replacement in writing, 180 days to close on it, and you can’t touch the money in between. The replacement can be anywhere in the country, which matters if you think Washington County rents have flattened and you’d rather own somewhere else. Set the exchange up before your sale closes. After closing, it’s too late.
Utah taxes a primary residence on 55% of its value. A rental gets the same 45% exemption if the tenant lives there as their primary home for at least 183 days a year, but the county wants a declaration to grant it, and many landlords never file one. Check your notice. If the property has been taxed at full value, a buyer who plans to live in it will see their bill drop by nearly half, which is a selling point worth putting in the listing remarks. If it’s a nightly rental or a second home carrying the exemption it shouldn’t have, fix that before a buyer’s title search finds it.
St. George allows short term rentals only in designated zones and communities, places like Desert Color, Paradise Village, Sports Village, and Las Palmas, and requires a city license there. In an ordinary single family zone, a nightly rental is prohibited no matter how well it’s been doing on the booking sites. Hurricane and Washington City have their own rules. That splits rentals into two very different sales.
A licensed nightly rental in an approved community sells to second home buyers and investors on its booking history, often above what the same floor plan fetches as a long term rental, and the listing should lead with the numbers. A nightly rental that isn’t allowed where it sits is a liability, not a feature. Sell it as a house, clean it up first, and don’t advertise potential that isn’t legal, because a buyer who relies on it has a claim.
Most long term rentals in Washington County are ordinary homes, and ordinary homes sell for more to people who want to live in them. An investor caps what they’ll pay at the rent divided by the return they want, and with rents flat and prices where they are, that number is often well under what a retiree will pay for the same single story with a gravel yard. Price it as a home, market it to both, and let the investor make an offer if the numbers work for them.
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