Idaho Homeowner’s Exemption Aims to Create Stable Tax Base

On Tuesday, March 8th the Idaho Senate voted to approve HB431 sending it to the Governor’s desk for signing into law. The bill changes the Idaho Homeowner’s Exemption to a set amount of $100,000, rather than tying it to the Federal Housing Price Index.

What is the Federal Housing Price Index?

According to the Federal Housing Finance Agency (FHFA) which manages the index, “The HPI is a broad measure of the movement of single-family house prices. The HPI is a weighted, repeat-sales index, meaning that it measures average price changes in repeat sales or refinancings on the same properties.” However, due to how the Index is calculated, there is an 18-month lag in reflecting actual economic conditions.  Therefore, when there are drastic changes in the market—as we experienced in 2008—the Index is not an accurate reflection of prices. Additionally the current tax law shifts the property tax between the different property categories. For example, when residential taxes are up agriculture, commercial, utilities, and other property types have lower taxes. Then when taxes for these categories are down, residential taxes go up.

Who gets a Homeowner’s Exemption?

As the Homeowner’s Exemption currently works, each owner-occupied primary residence (house or manufactured home) and up to one acre of land is eligible for a Homeowner’s Exemption. To qualify, applicants must own, occupy, and use the dwelling as of January 1 but before April 15. The annual deadline for applying for the Homeowner’s Exemption is 5:00 p.m. on April 15th. The exemption allows a maximum of 50 percent of the value, regardless of price, of the primary residence and up to one acre of land to be exempted from property taxes.

Where do I learn more about the Idaho Homeowner’s Exemption?

The Idaho State Tax Commission is the best resource for homeowner’s interested in learning more about Exemption. On its “Homeowners & Property Tax” page, the Commission explains how the Exemption works now, without the set amount: “Since taxes are based on the budgets of taxing districts, those districts can budget the same amount from property tax from one year to the next, but when property values go down, the levy rate goes up automatically to compensate. If one property’s value increases more than others, its taxes go up faster than others.”

Over the past 10 years, the Idaho Homeowner’s Exemption has been as high as $104,471 and as low as $81,000,due to fluctuations in the Index. The exemption amount for 2016 is $94,745.

Home Value Current Exemption Amount New Exemption Amount
$100,000 $50,000 $50,000
$200,000 $94,745 $100,000
$500,000 $94,745 $100,000
If decreasing 18-month lag in decrease $100,000

 

Going forward, the set exemption amount of $100,000, as outlined in HB431, aims to stabilize the Exemption, create a predictable tax base and provide certainty to homeowners and others who own real property in all categories.

Key points to remember:

  • Idaho is just one of a handful of states that provides a homeowner’s exemption.
  • The $100,000 exemption is actually higher than what we have currently, and higher than what most other states with an exception offer.
  • Both current and future exemptions are capped at 50% of a home’s value, regardless of that price.

Still have questions? Contact Miguel Legarreta, Director of Public Policy at Boise Regional REALTORS®.

RPAC Golf Tournament – Registration Open

Registration is now open for the 2nd Annual RPAC Golf Tournament on Wednesday, September 23rd at The Club at SpurWing. This 9-hole tournament is a 4-person scramble with a shotgun start at 9am followed by lunch at approximately 11:30am (the event should be done by 1pm).  If you are a current investor in RPAC or are interested in learning more about or becoming an investor in RPAC, this tournament is for you!

The tournament is open to all ACAR members.  Major Investors at the Sterling R ($1,000) level and above are invited to play for FREE! All other ACAR members are invited to play for $75. Or join us just for lunch for only $20. REGISTER NOW.

Registration includes:

  • 9 holes of golf on Spurwing’s new Challenge Course
  • golf cart
  • drink ticket
  • raffle ticket
  • awards lunch

All tournament proceeds benefit RPAC which works to protect homeownership and the real estate industry by fighting issues and electing pro-REALTOR® and pro-real estate candidates. RPAC dollars are used on the federal, state and local levels to support issues critical to the future of real estate and REALTORS®.

Stop Patent Trolls – Avoid Future Lawsuits

REALTORS® across the country receive threatening demand letters and lawsuits alleging patent infringement based on the use of common business tools such as drop down menus or search alert functions on websites and the scanner function on a copier. These patent trolls buy vague patents and use them to turn everyday business practices into potential lawsuits. TAKE ACTION NOW

How does it work? Patent trolls -– or, to call them by a less disparaging name, “patent assertion entity” –- is a person or group who tries to enforce patent rights against infringers in an attempt to collect fees, but who doesn’t actually produce any product or technology related to that patent. A patent troll might buy a patent from a bankrupt company, then sue another company, claiming that one of its products infringes on the patent.

IS MOBILE YOUR THING? GET THE REALTOR®PARTY MOBILE APP BY TEXTING “APP” TO 30644

When there is a Call for Action, you will receive a standard push notification alerting you. The mobile action alert allows you to take action immediately. The new mobile action alert format will make your participation a snap!

ACAR Legislative Wrap Up

It’s already more than half way through the year and ACAR has been working on a number community involvement and public policy programs.

ACAR led a campaign to support the passage a bond for the West Ada School District that brought $96 million in needed funds to build 4 new schools and renovate a high school.  After failing last summer the supermajority bond passed with 71% approval, relieving overcrowding in elementary, middle and high schools throughout Ada County.

ACAR has been meeting with the College of Western Idaho on their plans on expansion in Ada County and downtown Boise (we were also very pleased to have CWI Trustee and former IR CEO Mark Dunham present at our 59 Minute meeting).  In 2007, we were very supportive of the original bond campaign to create the college and which has seen remarkable growth to over 20,000 students (more than any community college in the history of community colleges).   REALTORS recognize education is vital to ensure a healthy environment for education and business.

This year ACAR has worked with the city of Meridian on downtown redevelopment and planning through a placemaking project that was highlighted by NAR .  Additionally, we are working on several other community projects that add value to homes and that improves communities we live and work.  Our work as a whole received national attention by NAR, as we were awarded the 1st ever Community Outreach Award.

The Idaho Legislature adjourned on April 10th (with a special one-day session on May 18th).   There were several impactful issues on the table including additional funding for transportation and education.   Funding in education included increases in teacher pay to make salaries more competitive in addition to ensuring adequate broadband/internet connectivity to students throughout Idaho.   Overall, public schools received a 7.4% increase, colleges and universities received a 3% increase, and professional-technical education received a 5.9% increase.

In addition, the Legislature addressed growing concerns about the condition of roads and bridges by increasing funding through registration fees ($21) and fuel tax (7 cents). These funds are utilized through a 60-40 split between the State Highway Account and local units of government and provides for about $136 million of the $540 million dollar annual shortfall.

Some of the issues concerning REALTORS and real estate include:

Several pieces of legislation passed by the Idaho Real Estate Commission, including cleaning up real estate statute (spelling, errors), changing the certification period for education providers, and clarifying an agent must be the owner of an LLC if they want to be paid through an LLC.

In response to ongoing debate over Urban Renewal Agencies, an Urban Renewal Study Committee was authorized to study urban renewal plans and issues and addressing concerns such as more sideboards and transparency.  ACAR works with a number of Urban Renewal Agencies on economic development, so this issue is important related to economic development.

There were several land use planning bills, but only one passed which prohibits the use of eminent domain by local government for obtaining land for greenbelts and trails, preferring the use of eminent domain for roadways.

There was a rule change by the Idaho Tax Commission clarifying the Homeowners Exemption as follows;

Part Year Ownership. For qualifying taxpayers who claimed the homeowner’s exemption on an eligible property, the homestead that qualified on January 1 of the current tax year shall continue to receive the exemption, provided however, the assessor may remove that property’s exemption if, by April 15 of the tax year, the taxpayer owns a different homestead and requests that the exemption be transferred to the second homestead.

For additional details on passed legislation download the Idaho REALTORS 2015 Session Wrap Up.

It has been a very productive year for real estate and real estate issues, we will continue to protect your business, enhance the communities we live and improve opportunities for home ownership

Drones Taking Real Estate Marketing to New Heights

Real estate agents across the country have been waiting for the Federal Aviation Administration to release guidelines permitting the use of drones for commercial purposes, such as marketing real estate. Last month, the FAA released its proposed rules, which would allow realty professionals to use drones to aid their clients in marketing and selling properties.

Unmanned aerial vehicles, more commonly known as drones, are aircrafts without a human pilot aboard. The applications for this new technology are varied and numerous. Property managers are interested in drones’ property inspection applications while real estate agents hope to use drones to capture videos and pictures that help visualize and market clients’ residential and commercial properties.

“New drone technologies can help real estate agents market homes and properties in ways that were cost-prohibitive in the past,” said Brenda Kolsen, Ada County Association of REALTORS (ACAR) President. “Aerial photography and video could someday be an added value that Realtors® provide for all of their clients, creating eye-catching listings that stand out to potential buyers.”

The new rules provide guidance on the various permits and registrations operators will need to obtain, when and where the drones can be used and the requirements for reporting accidents or injuries. It will likely take two years for the rules to be finalized and go into effect.

Some of the requirements included in the proposed rule are:

  • Commercial drones’ flights would be restricted to 500 feet in altitude, 100 miles per hour of speed and daylight hours.
  • All flights would need to be within visual line of sight of the person operating the drone.
  • Operators of commercial drones would be required to pass an aeronautical knowledge test be issued a permit to fly, which must be renewed every two years. This would be different from receiving a pilot’s license.

While drones are exciting new technology, until the rules are finalized Ada County Association of REALTORS® reminds sellers that real estate professionals cannot use drones to aid in the selling and marketing of properties.

“Currently, using drones to market and sell either residential or commercial property can result in heavy fines for agents,” said Kolsen. “But when the rules are finalized, drones will hopefully become an exciting, new tool to help sellers make their property even more attractive to buyers.”

For more information and updates, as they become available, please visit www.realtor.org/drones.

New House Leadership in Washington DC

There has been some major shifts in DC  following the loss by Majority Leader Cantor; a new Majority Leader and Majority Whip were elected by secret ballot yesterday.   Please find below a few articles which lay out the tenor of the leadership race, and who the new team is.   NAR has solid relationships with both Congressman McCarthy and Congressman Scalise, so our issues remain at the forefront within the leadership team.

photo by: Phil Roeder

REALTOR Legislation -Your Business

S1206: IREC Licensing (S1206) IRECs changes to education requirements, which we supported, education, requires the CORE Course every year (while keeping the overall hours necessary to renew the same).  In concert with this legislation there is a separate Rule which allows for expanded Courses relating to business development to be eligible for CE.   This gives REALTORS an opportunity to improve their personal business skills and receive CE credit, something our members stressed as important.

Homeowners Associations (H1310) Currently Home Owners Associations enforce covenants and restrictions in subdivisions by fining home owners for violations of such covenants and comply.  This bill puts some requirements in place that protect the home owner from actions by having the Homeowners Association Board meet and the homeowner notified and given time to act in good faith to correct the problem.  The issue was fines being issued without due process and in some cases for profiteering as opposed to being a tool to correct an action.  This REALTORS opposed the legislation because they thought it would make the process more difficult (they have some property managers who manage Associations on their Board).   Unfortunately there are some unscrupulous managers who profit from those fines and put homeowners in a very bad position, this fixes those cases.

Homeowners Exemption for Military Personnel (H584) Allows for the continuation of the homeowners exemption to military members who are sent to other parts of the country for training etc.  This has been a problem for some time and I’ve heard from a number of members who have clients deployed to non-combat zones and lose the exemption.

Cloud Tax Bill (H598) this is a revision of last year’s bill that restricted the Idaho Tax Commission from taxing Cloud based services such as the MLS and Forms and other business to business software.  The Tax Commission continued to consider taxing these Cloud based services, this is will clarify, with no uncertainty, what is taxable.

Exemption Value for Homeowners Exemption (H594) This legislation removes the index on the Idaho homestead exemption, and places the exemption value at $90,000 or 50 percent of assessed value, whichever is less.  We are still working on changing the April 15th date for filing, but we are starting with setting the number at $90,000 to avoid tax shifts and create consistency for homeowners (the number can still be changed in the future but the index being used created issues including tax bills going up when home values were going down).

 

Questions: Miguel Legarreta, miguel@myacar.com

Director of Public Policy

Flood Insurance Could Sink Your Sales – Take Action!

The Problem: Congress provided a 5-year reauthorization of the National Flood Insurance Program (NFIP), but severe implementation problems threaten to undermine real estate transactions where flood insurance is required to obtain a mortgage.

  • New NFIP rate structures have caused serious confusion and hardship for property owners.
  • The Federal Emergency Management Agency (FEMA) continues to delay and miss deadlines.
  • The legally required transition to true risk rates has plagued consumers with increases in rates beyond what anyone imagined possible

The Solution: A four-year time-out. Congress has legislation in the House, H.R. 3370 and Senate, S. 1610, to delay changes to the NFIP. These bills would:

  • prudently defer rate increases until FEMA completes the affordability study mandated by law
  • create a system for targeted rate relief
  • establish an office of the Advocate for flood insurance rate and mapping concerns.

Please Take Action today and tell your Member of Congress and Senators that NAR supports the “Homeowner Flood Insurance Affordability Act.”

Find Out More (pdf)

Close Call on City Council Elections

It looks like a lot of people will be voting this year in local elections. The races will be close your vote will make a tremendous difference. Candidates that receive support from RPAC are not selected based on their political party or ideology, but solely on their support of real estate issues. Issues on the federal,state and local level include;

  • Preventing 20-30% down payment requirements
  • Assuring the continuation of the mortgage interest deduction
  • 5-year flood insurance re authorization; creating certainty to thousands of transactions in Idaho
  • Extending Mortgage Cancellation Relief for an additional year
  • Stopping tax on cloud applications, like the MLS services
  • Preventing undue fees and taxes on local homes to keep prices stable

REALTORS® must be politically active. If not, who will take on the responsibility of protecting the values and rights we hold dear? Be assured that someone will—someone who may not value wise business planning and could threaten property owners and property rights.

So, next Tuesday, can we count on you to be one of the first in line to vote?

Or request an absentee ballot and vote early.