House Bill 561 — Property, assessment, market value

House Bill 561 — Property, assessment, market value

by
Parrish Miller
February 28, 2020
Parrish Miller
February 28, 2020

Bill description: HB 561 allows the fair market value of residential property to be based on the current owner's arms-length transaction within the previous 12 months. 

Rating: +1

Does it directly or indirectly create or increase any taxes, fees, or other assessments? Conversely, does it eliminate or reduce any taxes, fees, or other assessments?

Prior to being amended in the Senate (on 3/16), HB 561 amended Section 63-501A, Idaho Code to give property owners two additional options when they appeal a county assessment. First, they could give the county a report from an Idaho-certified appraiser of their property’s market value. Or they could give the county a document that shows the market price (an “arms-length transaction”) recently paid for the property. Either document would have to be from within the previous 12 months, and the one with the lower number would become the market value the government uses when it assesses the property for property taxes.

Unfortunately, the amendment made by the Senate limits the new language only to "residential property" and it removes the ability to use "a fee appraisal report completed by an Idaho certified appraiser within the previous twelve (12) months" and restricts the use of an "arm's-length transaction" to the specific transaction "by which the current owner obtained his current ownership of the residential property whose assessment is being appealed."

These changes significantly reduce the positive elements of HB 561, though there is still a very narrow possibility that some property owners might receive a single year of property tax relief in cases where the sales price is less than the county assessment. 

(+1)

Analyst's Note: HB 561 is similar to HB 390, introduced earlier this session, but improves upon it by stating unambiguously that the use of the sales price is optional. The bill includes language stating, "Nothing in this subsection shall require the disclosure of a documented sales price relating to the real property by any individual or entity." 

The primary problem with this bill is that the statute applies only to the sales price in an "arms-length transaction … by which the current owner obtained his current ownership of the residential property whose assessment is being appealed" rather than to the sales price in any transaction involving the property. These limitations insert a degree of subjectivity into the law that will disqualify some buyers from benefiting from reduced property taxes. 

This rating has been updated to reflect amendments made to this bill by the Senate on 3/16.

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