Housing (Homeownership)

This bill updates Idaho law to allow accessory dwelling units (ADUs) in single-family homes and restricts restrictions that would ban them. It prohibits homeowner associations from enforcing rules that strictly forbid ADUs, except when property owners agree in writing to such restrictions. For cities with populations over 10,000, the bill requires local governments to allow one internal or detached ADU per lot in single-family zones by February 2027. Local governments must also stop imposing higher fees, stricter parking rules, or smaller size limits on ADUs compared to primary homes. The law ensures ADU projects are approved automatically if they meet standard zoning requirements, while still allowing cities to adopt less restrictive rules if they choose.

This bill expands Idaho's homestead property tax exemption to cover up to $125,000 of a home's market value or 50% of its value, whichever is less, for owner-occupied primary residences. To fund this expansion, the bill increases the state sales tax rate and directs the additional revenue to local taxing districts to offset property tax losses from the exemption. The legislation also establishes a new Homestead Property Tax Replacement Fund to manage the revenue shift and simplifies the application process by allowing homeowners to apply for the exemption only once if they continue to occupy the same property.

This bill eliminates the proration of Idaho's homestead property tax exemption, allowing homeowners to receive the full exemption amount for the entire tax year if they qualify. It applies to owners who use their primary residence as their main dwelling and meet specific eligibility requirements, including uniform property appraisal certification by the state tax commission. Under the new rules, the exemption is calculated based on the full market value reduction rather than being divided by the number of days the property is occupied, and applications must be submitted by the end of the county's business year to receive the full benefit. The law also clarifies that if a homeowner's eligibility status changes during the year, taxes will be prorated only for the period after the status change occurs.

This bill (S 1277) prohibits homeowner associations and restrictive covenants from banning accessory dwelling units (ADUs) - secondary housing units like in-law suites or backyard cottages - starting July 1, 2026. It requires local governments to allow up to two ADUs on residential lots (one for properties ≤1 acre, two for larger lots) and bans restrictions on parking, fees, size (minimum 1,000 sq ft), setbacks, and height. The law also mandates that ADU projects be approved administratively without discretionary review and allows affected parties to sue for violations. It directly affects homeowners, associations, and local zoning authorities by standardizing ADU rules statewide.