A Guide to Idaho’s Property Taxes: Homeowners Exemption, Levies & More

As a real estate team that works everyday with investment-minded clients, we routinely come across clients who are perplexed by the Treasure Valley’s seemingly “random” tax rates. For example, sometimes taxes can vary greatly within a neighborhood or subdivision. Or while the price point of homes in Canyon County is much lower than that of Ada County, taxes in Canyon County are higher than taxes in Ada County. Both of these occurrences are often met with confusion.

To help address some of these questions, we’ve out together this high-level overview of taxes in our area. Keep reading to learn more about the relationship between assessed values, tax levies and taxes - and to discover how Idaho's Homeowner’s Exemption can impact primary residents and investors.

BOOMING GROWTH AND TAX RATES

As one of the fastest growing areas in the nation, Ada County residents are experiencing the greatest market appreciation since the recession. According to Ada County Assessor, Robert McQuade, median value increases for many neighborhoods in Ada County for 2018 are in the double-digits. This upward trend in home values has been met with understandable concern about its effect on property taxes.

It is a common misconception that property taxes increase in direct proportion to property values. According to this Idaho Statesman article, Idaho’s property tax system is budget-driven, not rate-based, and state law largely limits taxing districts’ authority to increase their budgets. In Idaho, the allowed budget increase is 3%, plus a growth factor which captures new development. This restriction prevents taxing districts from realizing a windfall during periods of market appreciation. On the flip side, during times of market decline, this limit preserves the consistent delivery of property tax funded services (such as law enforcement and fire protection, emergency services, road maintenance and other essential services).

Budgets are established first and then approved through a public hearing process. Once budgets are finalized, levy rates are calculated and certified for each tax code area by the the Idaho State Tax Commission.

To further understand the indirect relationship between assessed values, tax levies and taxes, check out the below example:

This two-year comparison shows the downward pressure a booming market has on tax levies. While the amount of property tax due still increased, it was not to the same extent as the home’s assessed value increased (because the tax levy was reduced).

WHY TAX LEVY RATES VARY GREATLY AMONG CITIES IN THE TREASURE VALLEY: NAMPA VS. MERIDIAN

As far as comparing tax levy rates across cities goes, things aren't so simple.

According to this informative Idaho Press-Tribune article, setting a city’s tax levy rate is a complicated process that involves numerous factors, which vary by city. Property values, the city’s budget and the city’s unique offerings/needs go into determining its tax levy rate — all of which differ greatly between the two cities in this example (Nampa and Meridian).

To determine a city’s tax levy rate, you take the amount of money a city collects in property taxes and then you divide it by the total taxable value of all properties within the city.

To fully understand this, the Idaho Press-Tribune provides the following example:

In Nampa, the property tax revenue for 2016 was $37 million. Tax revenue of $37 million divided by market value of $4.1 billion set the levy rate at 0.00903.

So, to determine how much money a Nampa homeowner owed in taxes, you multiply the tax levy rate by the taxable value of your property. So, if your taxable property was $100,000 (multiplied by 0.00903), your tax bill was $903.

On the flip-side, for a Meridian homeowner, the 2016 property tax revenue was $26.2 million, which required a levy rate of 0.00381. So, if your taxable property value was $100,000 (multiplied by 0.00381), your tax bill was $381.

Idaho Press-Tribune's example clearly illustrates that taxes in 2016 were (and continue to be) substantially higher in Nampa than they are in Meridian.

So you are probably wondering WHY taxes are so much higher in Nampa!?

Nampa is Idaho’s only "full-service city". According to the Idaho Press-Tribune as a “full-service city”, Nampa’s budget covers many services that Meridian’s doesn't, such as the Nampa Public Library, the Ford Idaho Center, the Nampa Municipal Airport, Nampa's golf courses etc. In comparison, the city of Meridian doesn't have library costs (those are covered by the Meridian Library District, a separate taxing entity), a large city-funded events center, an airport or a city-funded golf course. Understandably, these differences add to Nampa’s budget requirements and help to illustrate why comparing Nampa’s taxes to really any city across the Treasure Valley is truly "like comparing apples to oranges".

AVERAGE TAX RATE BY COUNTY

While tax rates can vary widely across cities (and even neighborhoods) in the Treasure Valley, here is the average tax rate for each county.

• Ada County: 0.801% (for a home with an assessed value of $400k, annual tax would be $3,204)
• Canyon County: 1.02% (for a home with an assessed value of $400k, annual tax would be $4,080)
• Boise County: 0.5% (for a home with an assessed value of $400k, annual tax would be $2,000)
• Gem County: 0.646% (for a home with an assessed value of $400k, annual tax would be $2,584)
• Owyhee County: 0.606% (for a home with an assessed value of $400k, annual tax would be $2,424)

IDAHO’S HOMEOWNERS EXEMPTION AND WHAT IT MEANS TO YOU

In Idaho, every owner-occupied primary residence (house or manufactured home) and up to one acre of land is eligible for a homeowner’s exemption. To qualify, you must own and occupy your home before April 15th and file your application with the Assessor's office by the deadline (for 2018 taxes, the deadline was April 17). Once you apply and qualify for this exemption, you only have to reapply if you move or if the ownership changes.

This exemption allows 50% percent of the value of your home including up to one acre of land to be exempted, or up to $100,000 worth of exemption; whichever is less.

Who Qualifies?
To qualify, applicants must own, occupy and use the dwelling as their primary residence by January 1st and apply before April 15. Although there are no income or age restrictions to qualify for the Homeowner's Exemption, taxpayers can qualify for an exemption on only one home. The statute governing qualifications for the Homeowner's Exemption is 63-602G; to find a copy of the statute please click here.

To apply for 2019, you must complete an application for Homeowners Exemption. You can get an application by emailing or calling your county’s Assessor’s office. Additional information (and county-specific forms) can be accessed by visiting the following pages:

• Ada County Homeowners Exemption
• Canyon County Homeowners Exemption
• Elmore County Homeowners Exemption
• Gem County Homeowners Exemption

WHAT IDAHO’S HOMEOWNERS EXEMPTION MEANS TO REAL ESTATE INVESTORS

As a property investor, it is typically safest to bank on owing the full tax assessment (even if the previous owners qualified for the Homeowners Exemption discount). Unless you are able to live in your investment property as your sole, primary residence (i.e. be there over 50% of the time) for the first year you won’t qualify for the Homeowners Exemption.

If you see large discrepancies between properties in the same neighborhood, it is likely that one has a homeowner’s exemption and one does not. If we can assist you in your real estate needs, whether that be selling or buying, please contact us.


ADDITIONAL RESOURCES:

Idaho Statesman: Ada County's Property Tax Assessments 2018
To learn more about why property tax assessments in Ada County increased this year, check out this comprehensive article.

Idaho Tax Commission’s Property Tax Estimator
To estimate your taxes, visit Idaho Tax Commission’s Property Tax Estimator here.

Ada County Tax Levy Rates
Check out Ada County’s Assessor’s Tax Levy Rate chart to glean insights from the varying taxing districts across the Treasure Valley.