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 property tax 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 2014 was $83,920. In 2015, the maximum increased to $89,580.
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 homeowners who qualify for the Circuit Breaker exemption can reduce their property tax bill even further. As of publication date, the maximum exemption is $1,320. Eligible individuals include senior citizens, widows and widowers, blind and disabled homeowners, and some veterans. Maximum annual income limits change annually and recipients must reapply every year. For example, to qualify for the exemption in 2015, your annual income for 2014 can’t have been more than $29,100.
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.
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.
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.
- Idaho State Tax Commission: Homeowners & Property Tax
- Fremont County, Idaho: Idaho Property Tax Reduction Homestead Exemption
- Nolo: The Idaho Homestead Exemption
- State of Idaho Legislature: Idaho Statutes: Title 55 Property in General-Chapter 10 Homesteads
- AllLaw: How the Chapter 13 Bankruptcy Plan Payment is Calculated