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House committee advances bill to remove 'marriage penalty' in homestead exemption, limit bankruptcy reinvestment rule
Summary
The House Business Committee voted Feb. 27 to send House Bill 282 to the House floor. The bill would treat married couples the same as two individuals for Idaho’s homestead exemption (doubling protection in many cases) and would change how a reinvestment requirement applies in bankruptcy cases.
The House Business Committee on Feb. 27 recommended House Bill 282 to the full House with a due-pass recommendation. Sponsor Representative Lance Clow and legal expert Alexandra (Alex) Gaval told the committee the bill has two principal effects: remove a marriage-based limit in Idaho’s homestead exemption and clarify that the statutory “reinvestment” requirement for homestead proceeds does not apply in bankruptcy cases.
Under current Idaho law the homestead exemption is $175,000. As described to the committee, two unmarried individuals who co-own a homestead may each claim a $175,000 exemption (effectively protecting $350,000 of equity), but a married couple sharing title is limited to a single $175,000 exemption — a disparity supporters described as a marriage penalty. The bill would correct that disparity so a married couple’s homestead exemption could protect up to $350,000 in equity.
Alexandra Gaval, an attorney with bankruptcy experience, explained the bill’s second part addresses a Ninth Circuit decision (McAllister v. Wells) that allows post‑petition events to affect homestead protection by extending a reinvestment requirement beyond the date of a bankruptcy filing. “The language that we have in the second part of the bill is designed to address that specific issue,” she told the committee, explaining the bill would provide that the reinvestment requirement does not apply in bankruptcy cases.
Gaval told lawmakers the change aligns Idaho with the majority practice in other circuits and is intended to prevent bankruptcy filers from losing homestead protection because they cannot meet a one‑year reinvestment deadline while also complying with post‑bankruptcy lending rules (for example FHA rules that require a longer waiting period to qualify for a loan after filing).
No members of the public registered to testify for or against HB 282 in the transcript. After the sponsor’s closing remarks the committee moved a due-pass recommendation and approved the motion by voice vote; the transcript records the chair’s declaration that “the ayes have it.”
What’s next: HB 282 goes to the House floor; if enacted it would change the statutory homestead exemption application between married and individual owners and alter the treatment of homestead proceeds in bankruptcy proceedings.
