Alan Domfest, Property Tax Policy Supervisor for the Idaho Tax Commission, announced earlier this month that the state’s maximum tax exemption for homeowners will decrease in 2010.  The maximum exemption will be reduced to $101,153 in 2010 as opposed to the current $104,471 for 2009.

Providing a tax exemption for qualified homeowners, Idaho law exempts 50 percent of assessed home values from being taxed.  Idaho legislation allows the exemption to apply to a primary dwelling, along with land up to one acre.  The exemption, however, cannot exceed a maximum value that fluctuates every year.  Maximum home values are determined by the Idaho Housing Price Index established by the Federal Housing Finance Agency.

Domfest noted that the reduction in benefit reflected the current climate of the residential real estate market.  An upside for some qualified homeowners is that the lowered 2010 exemption does not apply for homes valued under $202,000; their exemption allowance will not change.

Beginning in 1980, the tax exemption for Idaho homeowners offered an initial maximum of $10,000.  In 1983, it increased to $50,000.  In 2006, Idaho legislation increased the exemption to $75,000 and determined future exemptions based on the Housing Price Index.