What are your options if you are tired of being a landlord?
| Option | Good for | Tradeoff |
|---|---|---|
| Hire a property manager | Keeping the investment without the calls at night. | A management fee, and you still own the risk. |
| Sell with the tenant in place | Investor buyers who want rental income from day one. | A smaller buyer pool, and showings depend on the tenant. |
| Sell vacant | The largest buyer pool, including owner-occupants. | Lost rent while the home is empty and prepared for sale. |
| 1031 exchange | Deferring the tax and trading into something easier: newer, bigger, or professionally managed. | Strict deadlines and a qualified intermediary. |
| Sell and carry the financing | Monthly income without the tenants, and spreading out the tax. | The buyer's credit risk. See our guide to seller financing in Utah. |
Can you sell a rental with tenants in Utah?
Yes. A lease does not end just because the property is sold. The Utah Real Estate Purchase Contract says the buyer takes title subject to any long-term lease or rental agreements (30 days or more) that do not expire before closing, and that the seller credits the tenant's security deposits and prepaid rents to the buyer at settlement.
While you sell, your landlord duties continue:
- Keep the home fit to live in. The Utah Fit Premises Act requires owners to keep rentals safe and sanitary, and to maintain electrical, plumbing, heating, hot and cold water, and any air conditioning.
- Give notice before showings. Unless the rental agreement says otherwise, Utah requires at least 24 hours' notice before the owner enters the unit.
- Work with the tenant. A tenant who is respected and informed usually keeps the home show-ready. Some owners offer a rent credit for cooperation.
How much notice do you have to give a tenant in Utah?
| Type of tenancy | Notice to end it (Utah Code 78B-6-802) |
|---|---|
| Fixed-term lease | Ends at the end of the term without notice, unless the lease says otherwise. Read the lease for renewal terms. |
| Month-to-month | Notice served at least 15 calendar days before the end of the rental period. |
| Tenancy at will | At least 5 calendar days. |
Your lease can require more notice than the law, so read it first. Utah also requires deposits to be returned, or a written itemized list of deductions sent, within 30 days after the renter moves out. Whoever owns the property when the tenancy ends is responsible for that.
If a tenant does not move out, do not change the locks or remove belongings yourself. Eviction in Utah goes through the courts. Talk to a Utah landlord-tenant attorney.
What taxes do you pay when you sell a rental in Utah?
Selling a rental outright usually triggers three layers of tax:
- Depreciation recapture. The part of your gain that comes from depreciation on the building, called unrecaptured section 1250 gain, is taxed federally at a maximum of 25%.
- Capital gains tax on the rest of the gain, at 0%, 15%, or 20% federally depending on your income, plus Utah's flat 4.45% for 2026.
- Net investment income tax of 3.8% may apply if your modified adjusted gross income is above $200,000 (single) or $250,000 (married filing jointly).
A Utah County example
| Rental home bought in 2012 | $260,000 |
| Depreciation taken over the years | $95,000 |
| Adjusted basis | $165,000 |
| Sold in 2026, after selling costs | $560,000 |
| Total gain | $395,000 |
| Part taxed at up to 25% (depreciation) | $95,000 |
| Part taxed at capital gains rates | $300,000 |
Utah's 4.45% alone on $395,000 is about $17,600, before any federal tax. That is the money a 1031 exchange can keep working for you.
Illustration only, with made-up numbers. Not tax advice. Your CPA will figure your actual tax. Our guide to capital gains tax in Utah has more.
Should you do a 1031 exchange or just sell?
| Sell outright | 1031 exchange | |
|---|---|---|
| Tax now | Yes: recapture, capital gains, Utah, and possibly 3.8%. | Deferred, if you reinvest all the equity and replace the debt. |
| Landlord work | None. | Your choice. You can trade into a newer, larger, or professionally managed property, or a commercial property with a long-term tenant. |
| Deadlines | None. | Identify the new property within 45 days, close within 180. |
| Best for | Owners who need the cash, or whose gain is small. | Owners with a large gain who still want real estate income. |
Under current federal law, heirs generally receive a stepped-up basis on property held until death, which can erase the deferred gain. That is why many owners exchange and hold for the long run. See our full Utah 1031 exchange guide.
Selling a rental, step by step
- Read the lease and decide: tenant in place, or vacant.
- Talk to your CPA about the tax with and without a 1031 exchange, before you list.
- Talk to a qualified intermediary if you might exchange. The money cannot pass through your hands.
- Give any notice in writing, following the lease and Utah law.
- Gather the paperwork buyers expect: the lease, rent history, deposit records, and repair records.
- List, close, and credit the deposits to the buyer at settlement.
Common questions
Can I sell my rental property with tenants in it in Utah?
Yes. The buyer takes the property subject to existing long-term leases that do not expire before closing, and the seller credits the tenant's deposits to the buyer at closing.
How much notice do I have to give a month-to-month tenant in Utah?
At least 15 calendar days before the end of the rental period, under Utah Code 78B-6-802, unless the rental agreement requires more.
Do I have to give notice before showing a rental in Utah?
Yes. Utah requires at least 24 hours' notice before the owner enters a rented unit, unless the rental agreement says otherwise.
What is depreciation recapture on a rental property?
When you sell, the part of your gain that comes from depreciation on the building is taxed federally at up to 25%, instead of the usual capital gains rates.
Can I avoid capital gains tax when I sell a rental in Utah?
You can defer it with a 1031 exchange into other investment real estate. Utah follows the federal deferral. Moving into a former rental to use the home sale exclusion has limits, so ask a CPA.
Who keeps the security deposit when I sell my rental?
The seller credits tenant deposits and prepaid rents to the buyer at closing, and the owner at the end of the tenancy is responsible for returning the deposit within 30 days after the renter moves out.
Is Utah a landlord-friendly state?
Utah's notice periods are short compared with many states, such as 15 days to end a month-to-month tenancy and 3 business days on a notice for unpaid rent. Owners still must follow the Fit Premises Act and use the courts for evictions.
Many landlords are not tired of real estate. They are tired of toilets, turnovers, and late-night texts. So before you sell and write a big check to the IRS, I like to put three options side by side: keep it with a manager, sell outright, or trade into something that pays you without the work. I will only recommend a trade if the new property is projected to produce the same income or more. And if selling is the right answer, we will do it in a way that respects your tenant.
Ready to be done being a landlord?
Tell us about your rental: where it is, whether it is occupied, and what you want next. Matt will reach out personally, usually the same day. No pressure and no obligation.
Thank you.
Matt has your details and will reach out personally. If it is easier, you can text him anytime at (385) 477-8138.
Sources
- Utah Code § 57-22-3, Utah Fit Premises Act, duties of owners and renters
- Utah Code § 57-22-4, owner's duties, notice of entry
- Utah Code § 78B-6-802, unlawful detainer and notice periods
- Utah Code § 57-17-3, return of deposits
- Utah Code § 57-17-4, holder of owner's interest bound
- Utah Real Estate Purchase Contract, Sections 4.3(b) and 6.1 (effective December 4, 2024)
- IRS Topic No. 409, Capital gains and losses
- IRS Publication 544, Sales and Other Dispositions of Assets
- IRS Publication 527, Residential Rental Property
- IRS Topic No. 559, Net investment income tax
- 26 U.S. Code § 1031, exchange of real property
- 26 U.S. Code § 1014, basis of property acquired from a decedent
- Utah Code § 59-10-104, individual income tax rate
Last updated October 2026. This guide is general education, not legal or tax advice. Sumsion Real Estate is a real estate brokerage, not a law firm, CPA firm, or qualified intermediary. Talk to a Utah attorney before ending any tenancy and to your CPA before selling.
