Admin. R. Mont. 42.19.205 – Administration of Reduced Tax Rates

(1) A qualifying property whose owner has applied for, and been granted, a homestead rate or rental rate will receive the respective reduced tax rate through an application of an ETR to the appraised market value of the property as determined by the process in ARM 42.19.206.
(2) A qualifying property that receives a homestead rate, contains a single residential dwelling, and is used exclusively as a principal residence, will have the reduced tax rate applied to the entire market value of the property - including the land and all improvements situated upon the land.
(3) Except as provided in (4), the homestead rate does not apply to separately described or assessed parcels of land that do not support the principal residential improvements regardless of whether those parcels are contiguous with or adjacent to the principal residence.
(4) If the principal residence is a mobile home or manufactured home that is assessed separately from the land, the mobile home or manufactured home and the land may qualify for the homestead rate if both are owned by the applicant. If the land is not owned by the applicant, the reduced tax rate applies only to the mobile home or manufactured home.
(5) A qualifying property that receives a homestead rate and contains one or more secondary dwelling units will have the reduced rate applied as follows, based upon the use of the secondary dwelling units:
1. (a) If the secondary dwelling units are used as long-term rentals and the owner submits a completed rental rate application for the secondary dwelling units that is approved, the entire property value will receive one reduced tax rate.
  Informational Example: The property contains a principal residence and a secondary dwelling unit that is used as a long-term rental. The homestead rate and rental rate are both approved. The entire property value will receive one reduced rate.
  Total Property Value: $600,000
  Land: $100,000
  Principal Residence: $350,000
  Secondary Dwelling Unit - Long-term rental: $150,000
  Total Property Value: $600,000 x Homestead/Single-family Rental Rate
2. (b) If the secondary dwelling units are also used as a principal residence by an additional owner, and the additional owner also submits a completed application for a homestead rate that is approved, the entire property value will receive one reduced tax rate.
  Informational Example: The property contains two separate houses and is jointly owned by two brothers, each residing in one as his principal residence. Both brothers apply for a homestead reduced rate and are approved. The entire property value will receive one homestead rate.
  Total Property Value: $600,000
  Land: $100,000
  First Principal Residence: $350,000
  Second Principal Residence: $150,000
  Total Property Value: $600,000 x Homestead Rate
3. (c) If the secondary dwelling units do not qualify as a principal residence or long-term rental, then the portion of value attributable to the secondary dwelling units will be taxed at the rate provided in 15-6-134(3)(a), MCA.
  Informational Example: The property contains a principal residence and a secondary dwelling unit that is used as a guest house and short-term rental. The owner applies for a homestead rate and is approved. The value of the land and principal residence will receive the homestead rate. The improvement value associated with the secondary dwelling unit will receive the normal rate.
  Total Property Value: $600,000
  Land: $100,000
  Principal Residence: $350,000
  Secondary Dwelling Unit – Short-term Rental/Guest House: $150,000
  Land + Principal Residence = $450,000 x Homestead Rate
  Secondary Dwelling Unit – Short-Term Rental = $150,000 x Normal Rate
(6) A qualifying property that receives a homestead rate and is a unit of a multifamily dwelling unit will have the reduced tax rate applied as follows:
1. (a) The rate will apply to the portion of the property value attributable to the principal residence expressed as a percentage of the overall property value of the total number of dwelling units.
2. (b) The remaining portion of the property value from (a) will be taxed on the use of the remaining multifamily dwelling units as follows:
  1. (i) If one or more of the remaining multifamily dwelling units are also used as a principal residence for an additional owner of the property, and the additional owner submits a completed homestead rate application that is approved, the portion of value attributable to those remaining dwelling units will also receive the reduced tax rate that will be applied to the total value of the property.
    Informational Example: The property contains a duplex and is owned by two brothers who each reside in one of the units as their principal residence. Both brothers apply to receive the homestead rate for their respective units and are approved. The entire property value will receive one homestead rate.
    Total Property Value: $600,000
    Land: $100,000
    Principal Residences: $500,000
    Total Property Value = $600,000 x Homestead Rate
  2. (ii) If one or more of the remaining multifamily dwelling units are used as long-term rentals and the owner submits a completed rental rate application that is approved, then the portion of value attributable to those remaining dwelling units will be taxed at the rate provided in 15-6-134(3)(b)(ii), MCA.
    Informational Example: The property is a fourplex: one unit is owner-occupied as the principal residence, and the remaining three units are used as long-term rentals. The owner applies for a homestead rate for the principal residence unit and also applies for a rental rate on the three long-term rentals, and all are approved. The homestead rate will be applied to 25 percent of the property value associated with the principal residence and the multifamily rental rate will be applied to 75 percent of the total property value associated with the three long-term rentals.
    Total Property Value: $800,000
    Land: $100,000
    Improvements: $700,000
    Principal Residence Unit: $800,000 x 25% (1/4) = $200,000 x Homestead Rate
    Long-term Rental Units: $800,000 x 75% (3/4) = $600,000 x Multifamily Rental Rate
  3. (iii) If the remaining multifamily dwelling units do not meet the conditions outlined in (i) or (ii), then the portion of value attributable to those remaining dwelling units will be taxed at the rate provided in 15-6-134(3)(a), MCA.
    Informational Example: The property is a fourplex: one unit is owner occupied as the principal residence, two units are used as long-term rentals, and one unit is used as a short-term rental. The owner applies for a homestead rate for the principal residence unit and also applies for a rental rate on the two long-term rentals; both are approved. The homestead rate will be applied to 25 percent of the property value (associated with the principal residence), the multifamily rental rate will be applied to 50 percent of the property value (associated with the two long-term rentals), and 25 percent of the property value will receive the normal rate for the short-term rental.
    Total Property Value: $800,000
    Land: $100,000
    Improvements: $700,000
    Principal Residence Unit: $800,000 x 25% (1/4) = $200,000 x Homestead Rate
    Long-term Rental Units: $800,000 x 50% (2/4) = $400,000 x Multifamily Rental Rate
    Short-term Rental Unit: $800,000 x 25% (1/4) = $200,000 x Normal Rate
(7) A property that has been granted a homestead rate and contains a mix of residential and commercial uses will have the homestead rate applied as follows:
1. (a) The homestead rate will be applied to the portion of the property’s value attributable to the principal residence, as determined by 15-6-134(2), MCA.
2. (b) The remaining portion of property value attributable to the commercial use, as determined in 15-6-134(2), MCA, will be taxed at the rate provided in 15-6-134(3)(d), MCA.
  Informational Example: The property has a residential dwelling used as the owner’s principal residence and a large commercial shop used for the owner’s auto repair business. The highest percentage of the total land value is associated with the auto repair business, so the entire land value is classified as commercial. The owner applies for a homestead rate for the principal residence that is approved. The homestead rate will be applied to the portion of the improvement value attributable to the principal residence. The total land value and portion of the improvement value associated with the auto repair shop will receive the commercial rate.
  Total Property Value: $800,000
  Land - Commercial: $100,000
  Principal Residence Improvements: $300,000
  Commercial Improvements: $400,000
  $300,000 x Homestead Rate
  $100,000 + $400,000 x Commercial Rate
(8) A property that has been granted a rental rate will have the rate applied as follows:
1. (a) If the property that receives the rental rate contains a single residential dwelling, the total property value, including the land and improvements, will receive the rental rate provided in 15-6-134(3)(b)(i), MCA.
  Informational Example: The property contains a single residential dwelling that is used as a long-term rental. The owner applies for a rental rate which is approved. The single-family rental rate will be applied to the entire value of the property.
  Total Property Value: $450,000
  Land: $100,000
  Single-family Dwelling Improvements: $350,000
  Total Property Value: $450,000 x Single-family Rental Rate
2. (b) If the property that receives the rental rate contains a multifamily dwelling, then the rate will be applied as follows:
  1. (i) If all multifamily dwelling units, whether contained in a single structure or multiple structures, qualify for the rental rate, then the entire property value, including the land and improvements, will receive the multifamily rental rate provided in 15-6-134(3)(b)(ii), MCA.
    Informational Example: The property contains a fourplex and all four units are used as long-term rentals. The owner applies for a rental rate which is approved. The entire property value will receive the multifamily rental rate.
    Total Property Value: $800,000
    Land: $100,000
    Multifamily Dwelling Improvements: $700,000
    Total Property Value: $800,000 x Multifamily Rental Rate
  2. (ii) If only a portion of the dwelling units of a multi-family dwelling unit long-term rental property qualify for the rental rate, only the portion of value attributed to the dwelling units that qualify will receive the reduced tax rate provided for in 15-6-134(3)(b)(ii), MCA. The portion of value attributable to the dwelling units that do not qualify for the rental rate will be taxed at the rate provided in 15-6-134(3)(a), MCA.
    Informational Example: The property contains a fourplex: three of the units are used as long-term rentals and one unit is used as a short-term rental. The owner applies for a rental rate on the three long-term rentals which is approved. The multifamily rental rate will be applied to 75 percent of the property value (associated with the three long-term rentals). The normal rate is applied to 25 percent of the property value (associated with the one short-term rental).
    Total Property Value: $800,000
    Land $100,000
    Multifamily Dwelling Improvements: $700,000
    $800,000 x 75% (3/4) = $600,000 x Multifamily Rental Rate
    $800,000 x 25% (1/4) = $200,000 x Normal Rate
  3. (iii) The portion of value that receives the rental rate is calculated by taking the total property value multiplied by a factor of qualifying dwelling units divided by the total number of dwelling units.
3. (c) If the property that receives the rental rate contains a mix of residential and commercial uses, the rental rate will be applied as follows:
  1. (i) The rental rate will be applied to the portion of the property’s improvement value attributable to the long-term rental and will only apply to the land value if the residential use of the land is the highest percentage of the total value of the land in accordance with 15-6-134(2), MCA.
  2. (ii) A single unit long-term rental will receive the reduced rate provided in 15-6-134(3)(b)(i), MCA.
    Informational Example: The property includes a residential dwelling used as a long-term rental and a large commercial shop where the owner runs an auto repair business. The highest percentage of the total land value is associated with the commercial use of the auto repair business, so the entire land value is classified as commercial. The owner applies for the rental rate for the residential dwelling that is approved. The rental rate for single-family dwellings will be applied to the portion of the improvement value attributable to the long-term rental. The total land value and portion of the improvement value associated with the commercial auto repair shop will receive the commercial rate.
    Total Property Value: $800,000
    Land Value - Commercial: $100,000
    Single-family Dwelling Improvement Value: $300,000
    Commercial Improvement Value: $400,000
    $300,000 x Single-family Rental Rate
    $100,000 + $400,000 x Commercial Rate
  3. (iii) Units of a multifamily dwelling long-term rental will receive the reduced rate provided in 15-6-134(3)(b)(ii), MCA.
    Informational Example: The property includes a fourplex, with all units used as long-term rentals, and a large commercial shop where the owner runs an auto repair business. The highest percentage of the total land value is associated with the residential use for the long-term rental units, so the entire land value is classified as residential. The owner applies for a rental rate for the fourplex that is approved. The multifamily rental rate will be applied to the entire land value and portion of the improvements value attributable to the long-term rentals. The portion of the improvement value associated with the commercial auto repair shop will receive the commercial rate.
    Total Property Value: $800,000
    Land Value - Residential: $100,000
    Multifamily Dwelling Improvements Value: $400,000
    Commercial Improvements Value: $300,000
    $100,000 + $400,000 x Multifamily Rental Rate
    $300,000 x Commercial Rate
  4. (iv) The remaining portion of property value attributable to the commercial use, as determined in 15-6-134(2), MCA, will be taxed at the rate provided in 15-6-134(3)(d), MCA.
(9) Any property that has unusual or unique combinations of classifications, characteristics, and uses will be reviewed by the department on a case-by-case basis and the applicable reduced tax rate applied.

Authorizing statute(s): 15-1-201, 15-6-425, MCA

Implementing statute(s): 15-1-201, 15-6-134, 15-6-402, 15-6-405, 15-6-411, 15-6-415, 15-6-418, MCA

History: NEW, 2026 MAR, Notice No. 2025-430, Eff. 1/10/26.