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Idaho Property Taxes

Every year at the end of May, Idaho county assessors mail out Idaho property tax assessments – the notices telling people what the county thinks their property is worth. The assessor appraises homes based on several factors including, construction costs, demand, and historic sales for similar properties, arriving at a value best represents the home.

Since Idaho is a non-disclosure state, assessors do not have access to a property’s sold information unless reported to them by the landowner. They only have access to the public information that’s made available by the MLS. Consequently, they’re making an educated guess about what property values are for a given piece of land.

The assessors physically review about 20% of the area’s properties, with the remaining 80% being adjusted based on the initial 20% review’s results. For instance, if property values are determined to have increased 8% in the last year, that figure would be applied to the other 80%, increasing all values by 8% collectively.

You do have the ability to challenge and appeal your valuation if you feel your property is overvalued. You could do this if the assessor undervalues your property, but you could potentially wind up paying more in property taxes if the assessor agrees with you and believes your home is worth more.

What are Idaho Property Taxes Used for?

The Assessor’s Office is responsible for collecting and allocating taxes to taxing districts such as cities, counties, highway districts, education (including public schools and higher education), emergency services, mosquito abatement, cemetery districts, libraries, etc.

How are Idaho Property Taxes Calculated

There are two types of property tax systems in use today nationally, a rate-based system and a levy-based system.

A rate-based system is a flat rate that is paid annually based on the value of the home. California’s property taxes are rate-based, with landowners paying a flat percentage on the value of their property.

The advantage of a rate-based system is that it is easy to calculate, generally the home’s value multiplied by a fixed percentage.

The downside of a rate-based approach is that while values may go up, they may not fully cover the expenses municipalities have annually. Tax charges may also be erratic year-to-year, given how values change, especially in volatile real estate markets. Taxpayers are prone to large swings in tax burden.

In Idaho, the state uses the levy-based system.

While a levy-based system is more complicated to understand and calculate, it rarely has significant changes due to property values. It also provides services that are more consistent and reliable to area residents.

Each county in Idaho uses a levy formula to determine the amount of tax it will collect, based on budgetary needs. Rates are determined by the total assessed value of all property that is located within the county. The assessor’s office collects taxes based on the budgets of the various taxing entities to provide services, not the value of the property.

Interestingly, value and tax levies have an inverse relationship. Generally, when values increase, tax levies decrease. When values fall, tax levies tend to rise.

Ada County has an excellent overview of Property Values vs. Property Taxes using a levy system. The site also has several examples to help give an understanding of Idaho’s property tax system.

2022 Idaho Property Taxes

At a recent meeting, Ada County Assessor Robert McQuade told the Boise City Council that area property values are up 25% due to an unprecedented year of real estate sales across the county. Homeowners receiving their assessments in the mail will most likely have a certain level of sticker shock as assessments will be up considerably compared to last year. One Meridian resident saw the value of his home increase over $100,000 in a year, and he’s probably not the only one.

However, given that Idaho uses a levy taxing system, it’s possible that property taxes may go down as home values have risen across the state.

Homeowners Exemption

While home values have exploded across the state, homeowners can take advantage of the homeowners’ tax exemption, sometimes referred to as the homestead exemption.

During the 2020 legislative session, Idaho lawmakers changed when a homeowner tax exemption can go into effect. It used to be that if the exemption was applied for after April 15, the exemption wouldn’t go into effect until the following year. The updated law allows homeowners to file and get the exemption based on the date of filing.

Since 2016, homeowners would receive a discount of either 50% of the value of their home or $100,000, whichever was less, of the taxable value of their owner-occupied home.

During the waning days of the 2021 legislative session, lawmakers altered the ability of municipalities to adjust their budgets based on new growth. Additionally, they increased the maximum homeowners’ tax exemption to $125,000. So now, if a property were valued at $400,000, the taxable value would be $275,000 thanks to the new exemption amount.

As part of the levy-based property tax system, the taxable value after the homeowners’ exemption applies would be used to calculate tax rates.

Additional Resources

Since Idaho’s Taxes are dynamic from year to year, it’s crucial to have access to resources to help homeowners navigate the sometimes-chaotic property tax jungle. We’ve pulled together a few to help:

The Last Word

“In this world, nothing can be said to be certain, except death and taxes,” said Benjamin Franklin. For homeowners, property taxes are a certainty. Trying to understand how much a person’s property taxes will be year in and year out is undoubtedly a challenge here in Idaho. The effective tax rate won’t be set until the taxing authorities have their budget meetings, usually later in the spring and summer. It is good to know, however, the way the taxes are distributed based on property values helps ensure vital city services receive funds without causing residents extreme sticker shock in terms of what they’re paying each year.

Is the system perfect? As with anything, there’s always room for improvement, but we’ll have to wait until the 2022 legislative session to see if any marked changes are made in property tax laws going forward.

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