The updated property valuations that will be used to calculate this fall’s property tax bills are en route to homeowners and other Montana property owners, the state Department of Revenue said this week.
The mailed notices tee up a 30-day period in which property owners can appeal their valuations, which will likely rise for most residential properties as a result of widespread home value growth in Montana between 2022 and 2024, reports Montana Free Press.
“It’s important that Montana property owners review this information,” Revenue Department Director Brendan Beatty said in a statement. “If property owners wait until property tax bills are sent in November, it will be too late for the department to correct property characteristics and make adjustments that may impact the value of the property for Tax Year 2025.”
In contrast to most states, the valuations used to calculate Montana property taxes are produced at the state level rather than by county government offices. Most residential, commercial and agricultural properties have their valuations updated on two-year cycles.
Final tax bills are calculated and mailed each fall by county treasurers, who combine the state’s tax valuations with the millage rates set by cities, counties, school districts and other taxing jurisdictions to fund their budgets.
In a departure from past practice, this year’s reappraisal notices will not include an estimate of how the department’s updated property valuations will shift owners’ final tax bills.
The tax bill estimates caused widespread consternation when the department mailed its 2023 reappraisal notices, in part because those estimates failed to account for how local government millage rates would “float” down in response to across-the-board increases in residential property values.
Department spokesperson Jason Slead said in an email Wednesday that the department had determined the estimated tax line was a distraction from the primary intent of the reappraisal notices, which is to give property owners a chance to review and appeal their new valuations.
“Ultimately, the inclusion of the estimated taxes led to more confusion and provided minimal benefit,” Slead wrote.
Residential values rose by 40% on median during the 2023 reappraisal cycle, contributing to 21% tax increases for median properties.
In response to widespread concern over rising homeowner property taxes, the Montana Legislature passed a major relief package this year that will rework how taxable values are calculated, generally shifting taxes away from comparatively modest principal residences and long-term rental properties as second-home tax and homestead provisions are implemented over the next two years.
While the department has produced county-level modeling estimating how the new legislation will shift average tax bills, Slead said department staff don’t think those models are precise enough to provide reliable tax change estimates for individual taxpayers.
A detailed guide to the information on the appraisal notices is available on the revenue department website.
The forms will include a “current assessed value” that, for residential properties, nominally represents the amount the property could have been sold for as of Jan. 1, 2024. They will also include a “current taxable value” figure, a small fraction of the assessed value figure, which is the portion of a property’s value used to calculate tax bills.
In prior years, the taxable value has been 1.35% of assessed market value for most residential properties. The tax-relief package passed this year replaces that math with a set of tiered rates that will generally reduce taxable values for modest homes in order to shift tax burden toward other types of properties. The second-home tax that applies higher conversion rates to properties that aren’t qualified as principal residences won’t take effect until next year.
