BOISE — Idaho homeowners would no longer see their homeowner’s property tax exemption shrink as home values soar, under bipartisan legislation introduced in a House committee on Tuesday.
Rep. John Vander Woude, R-Nampa, and Sen. Maryanne Jordan, D-Boise, are co-sponsoring the legislation to remove the $100,000 cap on the exemption, and bring back the indexing of the exemption to the Idaho Housing Price Index, which lawmakers repealed in 2016.
Vander Woude told the House Revenue & Taxation Committee that home values have been shooting up, and it’s time to bring back the indexing and remove the cap. The committee voted unanimously to introduce the bill, clearing the way for a full hearing.
Jordan said, “When the exemption was capped, no one could have anticipated the incredible rise in taxable values. Now they have been blindsided by enormous tax bills they could not have seen coming.”
The homeowner’s exemption exempts roughly half the value of an owner-occupied home from property taxes, but the amount has varied over the years. It was created by voter initiative in 1983, and dubbed the “50-50” exemption; at that time, it was capped at $50,000 or 50 percent of the value of the home — whichever is less. That amount remained unchanged from 1983 until 2006, causing it to fall far below 50 percent of most Idaho homes’ values.
In 2006, lawmakers raised the cap to $75,000 trying to get back closer to exempting 50 percent of home values, and added the indexing. As a result, the maximum exemption went up and down with Idaho home values over the years; it rose to $104,471 in 2009, and dropped as low as $81,000 in 2013.
But in 2016, when the exemption was poised to again exceed $100,000, lawmakers removed the indexing and capped the exemption at $100,000 at the urging of the Idaho Association of Realtors and business and agriculture interests. That meant from that point on, any home valued at $200,000 or more got less than a 50 percent exemption.
Because the exemption doesn’t change the total amount of taxes collected, if it is capped, that means homeowners in any particular county pay a little more and other types of property taxpayers pay a little less. That’s why other types of property taxpayers backed limiting the exemption.
In 2018, according to the Idaho State Tax Commission, homeowners who qualify for the exemption paid 46.8 percent of all property taxes paid in Idaho, while owners of non-owner occupied residential property paid 19 percent; commercial property, 27.2 percent; and agricultural property, 2.6 percent. From 2017 to 2018, property taxes paid by Idaho homeowners rose 8.8 percent.