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County officials say increased homeowner’s exemption will provide little tax relief

After months of talks, the Idaho Legislature voted to increase the homeowner’s exemption to $125,000. So, what does this mean for you?

With the legislation awaiting Governor Brad Little’s signature, BoiseDev took a look into who benefits the most from the change and who will see higher property taxes because of the shift.

This change is part of a property tax package made up of several compromises including a cap on local government budgets, changes to the circuit breaker and tweaks to the property tax formula legislators hope will bring some tax relief to Idahoans struggling with skyrocketing values.

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The homeowner’s exemption was indexed to fluctuating values prior to 2016, when the Idaho Legislature opted to cap it at $100,000. This program exempts half of the taxable value of your home up to $125,000 under the new property tax deal.

This increase doesn’t help everyone equally. According to an analysis conducted by the Ada County Clerk’s Office, it will have some effect, but not enough to counteract the impacts of the increases in assessments after 2020’s spike and the sunsetting of Little’s public safety program that gave taxpayers a break last year.

If you applied the new homeowner’s exemption to last year’s property tax values without the assistance from the Governor’s tax relief program, property tax values would decrease roughly 3%, or $77.81, for all Ada County homes. Homes valued between $250,000 and $300,000 are the most impacted by the change to the homeowner’s exemption. But, homes and residential lots valued less than $200,000 will have a property tax increase between 6.2% and 4.3% because the taxes will shift back on to their properties from those with higher values.

Once homes are valued more than $300,000, the amount of benefit they receive from the homeowner’s exemption slowly decreases.

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“When your home goes from $200,000 to $250,000 you all of a sudden aren’t getting any exemption on more of your home value so your taxes increase,” Ada County Clerk Phil McGrane said. “Whereas, a million dollar home doesn’t hardly notice it and it has a diminishing return.”

Things look a lot less rosy once you factor in the latest round of double digit increases on Ada County’s property tax assessments coming in for 2021. There, the average property tax value bill will increase .8% or $16.31, according to the model built by the clerk’s office. Homes and residential lots valued less than $200,000 will see the biggest jump in tax bills, up 7.6% or an average of $65.99 for the year.

This relatively simple model was built by Ada County Clerk’s Office Performance Analyst Anthony Lock-Smith. He said it doesn’t take into consideration the shifts in values from the changes to the personal property tax made by the new legislation and it assumes an average increase of 10% for commercial property as a starting point.

“If commercial property values grow at a lower rate than 10%, then it’s going to be worse,” Lock-Smith said, about the tax increases coming to homeowner’s in the county.

BoiseDev reported that roughly one fifth of homes in Ada County are not owned by the primary residents. This percentage has stayed steady in recent years, even as the interest in the Treasure Valley from outside investors has increased. McGrane said if the overall share of homes owned by people who don’t live in the properties increases down the line, it will be better for the people with a homeowner’s exemption.

“For each property coming off the exemption, it adds assessed value to the county and lower’s the levy and makes it better for all other homeowner’s as well,” McGrane said.

Valley County

After several attempts to reach Valley County over the last month the assessor office and Statistician Anthony Francesconi’s got back to BoiseDev and said the changes to the homeowner’s exemption “doesn’t seem to be impacting (residents) at all.” Francesconi says this is partially due to the competitive market and because right now a prospective homebuyer’s only worry is getting into a house.

“With the kind of increases that we’re seeing in the market I really don’t expect it to have much of an impact on overall taxes,” he said.

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Another reason Francesconi believes the homeowner exemption is not impacting many residents is because roughly 70% of homes in Valley County are second homes.

“Buyers that come up here to look for second homes for vacation rentals, they don’t even factor those exemptions in,” he said. “So I don’t expect the balance to change much at all between last year and this year.”

According to Francesconi, the median home price in the county is around $482,000. However, people with homes valued more than $300,000 start to receive fewer benefits from the exemption.

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