Kootenai County Assessor Mike McDowell is reminding property owners that the maximum homeowner's exemption in Idaho has been reduced, and it will affect taxable property values and possibly homeowners' tax bills.

The maximum homeowner’s exemption for 2012 is  $83,974, down from the 2011 maximum exemption of $92,040.

"This new maximum amount is lower than last year’s maximum of $92,040 due to the continued decline in the Idaho Housing Price Index, which is used to adjust the exemption amount each year," said a press release sent out by McDowell's office. "The Idaho Housing Price Index is calculated by the Federal Housing Finance Agency."

Idaho provides a partial property tax exemption to qualified homeowners for their primary dwelling and up to one acre of land. The law exempts 50 percent of the assessed value from taxation; however, the exemption can’t exceed the maximum value that changes each year.

In 2005 the Idaho Legislature changed the homeowner’s exemption law. They added the land value to the property which qualifies for exemption and increased the maximum amount of the exemption from $50,000 to $75,000. They also included an annual index using the Idaho Housing Price Index to factor the exemption amount each year following the change. The previous $50,000 maximum exemption amount was unchanged since the law was passed in 1982.

As a result of the Idaho Housing Price Index factor the exemption maximum increased for several years following the legislative change in 2006.

"This reduction in your homeowner’s exemption will cause your net taxable value to increase, which could in turn impact your tax obligations this fall. Ultimately, each taxing district’s budget will drive what we all pay in property taxes. Your participation in the budgeting process could help limit increases. Hopefully as the housing market begins to level out we will see less of a change in the exemption maximum in future years."