Tax Relief

District officers say elevated house owner exemption will supply little tax breaks

After months of discussion, the Idaho Legislature voted to increase the homeowner exemption to $ 125,000. What does that mean for you?

With the legislation awaiting Governor Brad Little’s signature, BoiseDev has been researching who will benefit most from the change and who will see higher property taxes as a result of the postponement.

This change is part of a property tax package that consists of several compromises, including a cap on local government budgets, changes to the breaker, and optimizations to the property tax formula. Legislators are hoping Idahoans struggling with skyrocketing values ​​can get tax breaks.

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The homeowner exemption was indexed to volatile values ​​prior to 2016 when Idaho law decided to cap it at $ 100,000. This program exempts half the taxable value of your home up to $ 125,000 under the new property tax treaty.

This increase does not help everyone equally. According to an analysis by the Ada County Clerk’s Office, this will have some impact, but not enough to counter the impact of the increases in ratings after the spike in 2020 and the phasing out of Little’s public safety program that gave taxpayers a break last year.

If you applied the new homeowner exemption to last year’s property tax rates without the governor’s tax break support program, the property tax rates for all Ada County homes would decrease by about 3%, or $ 77.81. Homes valued between $ 250,000 and $ 300,000 are hardest hit by the homeowner exemption change. However, for homes and lots less than $ 200,000 in value, there will be an increase in property tax of between 6.2% and 4.3% as taxes shift from those with higher values ​​back to their homes.

Once homes are worth more than $ 300,000, the amount of benefits they receive from the homeowner exemption slowly decreases.

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“When your home goes from $ 200,000 to $ 250,000, suddenly you are no longer getting a tax exemption on your home value, so your taxes go up,” said Phil McGrane, Ada County administrator. “On the other hand, a million dollar house hardly notices this and it has a diminishing return.”

Things look a lot less rosy when you factor in the recent double-digit increases in Ada County’s property tax assessments for 2021. There, the average property tax value will increase by 0.8% or $ 16.31 according to the model built by the clerk’s office. Homes and residential lots less than $ 200,000 in value will see the largest increase in tax charges, a 7.6% increase, or an average of $ 65.99 for the year.

This relatively simple model was built by Anthony Lock-Smith, Ada County Clerk’s Office Performance Analyst. He said it does not take into account the shifts in value caused by the changes in personal property tax brought about by the new legislation and assumes an average increase of 10% for commercial real estate.

“If the value of commercial real estate goes up less than 10%, it gets worse,” Lock-Smith said of the county’s homeowner tax hikes.

BoiseDev reported that about a fifth of the homes in Ada County are not owned by major residents. That percentage has remained constant over the past few years, although external investor interest in Treasure Valley has increased. McGrane said if the overall proportion of homes owned by people who don’t live in the real estate increases across the board, it will be better for those with a homeowner exemption.

“For every property exempted from the exemption, the county appraised value will increase and the levy will decrease, and it will be better for all other homeowners,” said McGrane.

Valley County

After several attempts to reach Valley County last month, the appraisal bureau and statistician Anthony Francesconi got back to BoiseDev saying the changes to the homeowner exemption “don’t seem to affect (residents) at all”. Francesconi says this is partly due to the competitive market and because a potential homebuyer is currently only worried about getting into a house.

“With the kind of increases we see in the market, I really don’t expect much of an impact on total taxes,” he said.

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Another reason Francesconi believes homeowner exemptions won’t affect many residents is that roughly 70% of Valley County’s homes are second homes.

“Buyers who come here looking for vacation rental second homes don’t even consider these exemptions,” he said. “So I don’t expect the balance to change that much between last and this year.”

The average home price in the county is around $ 482,000, according to Francesconi. However, those with a home value greater than $ 300,000 will receive fewer benefits from the exemption.

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