BOISE – The Idaho House voted Tuesday to remove the inflation index from the state’s homeowner’s exemption from property taxes, instead fixing the exemption at a maximum of $100,000 - and opening the door to tax increases next year for homeowners in Kootenai County.
“Stable, predictable tax policy is by far the better way to go on this,” Rep. Janet Trujillo, R-Idaho Falls, the bill’s sponsor, told the House. She said it’s burdensome for homeowners to have their maximum exemption go up and down with the market.
Rep. John Gannon, D-Boise, retorted, “This bill does bring some predictability. That predictability is that when … the cost of housing increases the value of your home beyond $200,000, you will not have the benefit of a higher exemption, because the exemption is capped. So you will essentially have a higher tax.”
Idaho’s homeowner’s exemption shields a portion of an owner-occupied home’s value from property taxes. It was created in 1980 with a maximum value of $10,000, then moved up just two years later to half the value of the home or $50,000, whichever was less. In 2006, lawmakers raised it to $75,000 or half the value of the home and lot, whichever was less, and indexed it, so it goes up and down with the Idaho housing market.
Trujillo, backed by the Idaho Association of Realtors and the Idaho Farm Bureau, said that meant at the lowest point of the recession, when home values dropped sharply in Idaho, the exemption dropped too, potentially meaning a tax increase for hard-hit homeowners. But as values increased, the exemption has risen back up. This year, the maximum homeowner’s exemption is $94,745; next year, it’s expected to be above $100,000.
The exemption doesn’t change the total amount of taxes collected; if the homeowner’s exemption goes up, all other types of property taxpayers in the county pay a little more to make up the difference; if it goes down, they pay a little less.
Five Republicans and 10 Democrats voted against the bill on Tuesday; 51 Republicans and four Democrats voted in favor. The bill now moves to a Senate committee.
Trujillo told the House that Idaho home prices exceed $200,000 only in a few places, and those that are that high in the Coeur d’Alene area are probably second homes. But last week, Kootenai County Assessor Mike McDowell said the average home price in Kootenai County is now $215,000.
Lawmakers added the indexing in 2006 after complaints that an unfair share of property taxes was shifting to homeowners.
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