Within a few days, homeowners will discover once again how their representatives in Boise have let them down.
That lesson will come to them through the annual assessment statements headed their way. For most, the assessments will be higher than last year, reflecting the red hot real estate market.
A word of caution here: A higher assessment does not translate into a commensurate increase in property taxes. That won’t be clear until local taxing districts set their levies and budgets later this year. The Idaho State Tax Commission’s website (tax.idaho.gov) has a tax estimator that comes close.
But you can count on this much: As the assessed value of your home climbs above $200,000, you will pay a disproportionately larger property tax bill. The reason involves Idaho’s homestead exemption. That law, first enacted by voters through the initiative process, shields from taxation half of an owner-occupied dwelling — up to a point.
The Legislature gets to say where.
Until 2016, lawmakers allowed a housing market index to set the upper limit. During the Great Recession, when housing prices bottomed out, the index dropped with it. But just as housing prices were recovering, lawmakers followed the direction of the state Realtors Association and capped the exemption’s benefit to homes worth $200,000.
Had lawmakers left well enough alone, the housing index would have extended the homestead exemption’s upper limit to homes worth $243,900.
That’s bad news for almost half of Idaho’s homeowners — 219,816 — who lived in homes assessed at more than $200,000 as of 2018, the last year statewide information was available.
Here are the latest numbers from Nez Perce County:
l The average home sale value reached $226,000, up from $206,000 last year and $201,000 in 2017.
l The median home sale value — meaning half the homes were worth more and half were less — was $214,700, up from $195,700 in 2018 and $185,000 a year earlier.
l 1,696 homeowners found their properties assessed at more than the $200,000 limit. That’s up from 1,304 in 2018 and 873 the previous year.
In Latah County:
l The average home sale value came to $257,552, compared to $236,696 in 2018 and $227,548 the previous year.
l The median home sale was $235,150, rising from $225,000 last year and $209,500 in 2017.
l 4,923 homeowners were assessed at more than $200,000. The year before, 4,346 homeowners had maxed out, compared to 3,691 in 2017.
So how does this work?
Say the assessment on your Lewiston residence comes in at $184,978 — about a 3 percent increase over last year but still well within the full protection of the homestead exemption. For illustrative purposes only, assume no change in the levy rates. Under those circumstances, your tax bill would also rise by a modest 3 percent — or $55 — to $2,021.
Here’s a more typical example: Last year, your assessment breached the exemption’s cap by hitting $205,964. So rather than paying tax on half its value, you paid tax on 51.5 percent.
Since your latest assessment climbed up to $213,572, you will pay property tax on more than 53 percent of its assessment value.
Again, assuming levies are flat, that means your tax bill could rise 7.1 percent — or $166 — to $2,481.
What if your home was assessed at $227,694 this year, up from $220,163 a year ago? You went from paying on 54.6 percent of its taxable value to more than 56 percent. Theoretically, your tax bill would rise 6.2 percent — or $165 — to $2,790.
These are not palatial estates; they are the kind of middle-class homes that the homestead exemption was meant to protect. But the way Idaho property taxes work, if homeowners are paying a larger share of property taxes, others — landlords, commercial businesses and industry — are paying less.
Earlier this year, Boise Democratic Sen. Maryanne Jordan and Nampa Republican Rep. John Vander Woude proposed a simple fix — reinstate the full value of the homestead exemption and index it for inflation.
But House Revenue and Taxation Committee Chairman Gary Collins, R-Nampa, refused to even give them a hearing.
Not that long ago, nothing got legislators’ attention quite like a bunch of riled-up property taxpayers. With your assessment notice in hand, now would be as good a time as any to get riled up at these lawmakers.— M.T.