Idaho homestead laws cover property taxes and bankruptcy situations for a homeowner’s primary residence. The property tax exemption decreases your annual property tax liability. The bankruptcy exemption protects accumulated equity in your home.
Property Tax Exemption
The Idaho homestead exemption reduces the base upon which property taxes are calculated. However, while the exemption always decreases the base by 50 percent of the value of your home and up to one acre of land, the maximum exemption amount changes annually. For example according to the Idaho State Tax Commission, the maximum exemption in 2020 was $100,000. In May of 2021, the Idaho Senate increased the amount to $125,000.
New homeowners must file a one-time application and have an Idaho-issued driver’s license or identification card to establish the home as their primary residence and qualify for the property tax exemption. The Homeowner’s Exemption Application is available from the assessor’s office in each county.
The Circuit-Breaker Exemption
Low-income senior homeowners who qualify for the "circuit breaker exemption" can reduce their property tax bill even further. In May of 2021, the Idaho Senate increased this exemption to $1,500. Eligible individuals include senior citizens, widows and widowers, blind and disabled homeowners, and some veterans.
Bankruptcy Homestead Exemption
The Idaho homestead exemption for bankruptcy protects up to $100,000 of accumulated equity in your home. The bankruptcy exemption applies automatically if you occupy the home. However, you have the option to file a Declaration of Abandonment for the home in which you’re currently residing, and then file a Homestead Declaration to use the exemption for another residence or for unimproved land.
Read More: What is Chapter 7 Bankruptcy?
Chapter 7 Bankruptcy
The homestead exemption may stop a trustee from seizing your home in Chapter 7 bankruptcy. However, for this to work, the equity in your home must be equal to or less than $100,000. For example, because the exemption only protects $100,000, if you have $150,000 in home equity the trustee likely will seize and sell your home. However, if this happens, the trustee must reimburse the amount of the exemption to you from the proceeds of the sale.
Read More: How to Refinance a Home During Chapter 13 Bankruptcy
Chapter 13 Bankruptcy
The homestead exemption affects a Chapter 13 repayment plan indirectly. Chapter 13 repayment rules consider non-exempt home equity as money you can access and use to repay unsecured debt obligations. In Idaho, this means you can shelter up to $100,000 in home equity from your creditors. As a result, equity that exceeds $100,000 will count as money you use to fund the plan.
For example, if you have a mortgage-free home valued at $200,000, the homestead exemption shelters $100,000. For the remaining non-exempt equity, you’ll need to divide $100,000 by the total number of months in your repayment plan, and add the amount to each monthly payment.
Based in Green Bay, Wisc., Jackie Lohrey has been writing professionally since 2009. In addition to writing web content and training manuals for small business clients and nonprofit organizations, including ERA Realtors and the Bay Area Humane Society, Lohrey also works as a finance data analyst for a global business outsourcing company.