Understanding Property Taxes and Reverse Mortgages in Idaho

Idaho is a state known for its stunning landscapes, thriving communities, and a high quality of life. It’s a place where many people, including retirees, choose to settle down and call home. However, when it comes to managing the financial aspects of homeownership, it’s essential to understand the intricacies of property taxes and how they relate to financial tools like reverse mortgages. In this comprehensive guide, we will delve into the world of property taxes in Idaho, and how reverse mortgages can be a viable financial solution for homeowners, especially those who are retired or approaching retirement.

Demystifying Property Taxes in Idaho

The Basics of Property Taxes

Property taxes are a vital source of revenue for local governments in Idaho. These taxes fund essential public services like schools, infrastructure development, public safety, and more. Understanding how property taxes work in Idaho is crucial for all homeowners.

In Idaho, property taxes are determined based on the assessed value of your property, which the county assessor’s office determines. The assessed value is then multiplied by the local property tax rate to calculate your property tax bill. The local tax rate may vary from one area to another within the state.

Property Tax Exemptions in Idaho

Idaho offers several property tax exemptions that homeowners can benefit from, particularly for seniors and disabled individuals. Two notable exemptions include:

Circuit Breaker Property Tax Reduction Program

This program provides financial relief to low-income seniors and disabled individuals. It helps reduce the property tax burden for those who qualify, ensuring that homeowners with limited income can continue to afford their homes.

Property Tax Deferral Program

The Property Tax Deferral Program allows eligible homeowners to defer some property taxes, effectively reducing the financial burden on fixed-income individuals. Taxes deferred through this program accrue as a lien on the property but do not have to be repaid until the property is sold or transferred.

Reverse Mortgages – An Introduction

What is a Reverse Mortgage?

A reverse mortgage is a financial product designed to help homeowners aged 62 or older convert a portion of their home equity into cash. Unlike traditional mortgages, reverse mortgages do not require monthly mortgage payments. Instead, the loan is repaid when the homeowner sells the property, moves out, or passes away. Here’s how it works:

• Homeowners can receive funds in various ways, including a lump sum, monthly payments, or a line of credit.
• The loan amount, plus accrued interest, becomes due when the homeowner is no longer lives in the home.
• The homeowner retains ownership of the home, and it remains their responsibility to maintain it and pay property taxes and insurance.

Types of Reverse Mortgages

In the United States, there are three primary types of reverse mortgages:

Home Equity Conversion Mortgage (HECM)

HECMs are the most common type of reverse mortgages. They are insured by the Federal Housing Administration (FHA) and offer various disbursement options, making them flexible for homeowners. HECMs also come with certain consumer protections.

Proprietary Reverse Mortgages

These are privately offered reverse mortgages, and they are not subject to the same regulations as HECMs. Proprietary reverse mortgages may offer higher loan limits for homeowners with expensive homes.

Single-Purpose Reverse Mortgages

These are usually offered by state or local government agencies or non-profit organizations. They are designed for specific purposes, such as paying property taxes or repairing homes.