News from the Knoff Group

Real Estate Taxes in Montana – Insight on Assessment and Appeal

The Hard PillReal estate taxes and the methodology that creates the final numbers can be confusing and frustrating at times – but it is a pill we have to swallow.  The last cycle for property appraisal in Montana was in 2008 – and things have a tendency to shift in the six year cycles between appraisals.  Our contract coordinator Russ Madigan at Winter and Company prepared this response to a question about Montana property taxes for a buyer and I think sheds light on how the process works – how an appeal works and what to expect/plan for in the coming years.

The methodology used to arrive at real property taxes in Montana is somewhat complicated and not easily understood by the casual observer. Basically, Montana appraises real property once every 6 years. The last appraisal was in 2008 and the next will be in 2014. In order to avoid a huge increase in the first year of the 6 year cycle, the increase is phased-in at the rate of one-sixth (16.67%)  each year. Also, the state legislature may increase the homestead exemption and/or lower the tax rate slightly each year.

 The filing of an appeal is generally limited to a thirty day period after receipt of an assessment notice.

Assessment notices are mailed after each 6 year re-appraisal cycle and also in the month of May each year if there is a new owner of the property.

Additionally, a one-time appeal is permitted during each 6 year cycle. My recent experience is that successful appeals are not easily granted and moreover must be based on challenging the 2008 appraisal and 2008 market values.

In other words, a current appraisal will not be considered unless the appraiser adjusts the appraised value back to 2008. Since the last state-wide appraisals were completed July 1, 2008 and therefore just before the market collapse, most all current taxpayers are paying taxes based on an appraised value far in excess of current market value.

I explained to the Montana Department of Revenue that it is inherently unfair to tax a property owner based on an appraised value that in some cases is two to three times current market value and they explained to me very politely that although unfortunate, that’s the way it is.

The next re-appraisal is set to commence January 1, 2014 and at this time all property owners will have an opportunity to submit an appeal.