Department Of Revenue Hears Concerns On Reappraisals

Taxpayers are keeping the phone lines buzzing to the Department of Revenue with concerns about property taxes, agency officials said last week.

But far fewer property taxpayers have appealed their new assessments this year compared to a spike in 2023, according to data from the Department of Revenue.

In 2023, the number of appeals was 21,322, but this year, it’s 13,271, according to the department. In 2021, the number was 10,455.

Still, values are going up, and Paula Gilbert, head of the Property Assessment Division, said the department is fielding questions from people who don’t want to pay more.

“We’ve had many, many concerns from taxpayers this cycle about the increase in their values,” Gilbert said.

The Revenue Interim Committee heard updates Monday on property reappraisals and rebates, among other items, following a legislative session that focused on reducing property taxes for Montana’s residential taxpayers.

The emphasis came after significant increases in residential values and property taxes in the 2023 appraisal cycle, and a projected spike of 21 percent in residential market value this year.

In public comment, Jason Rittal, with the Montana Association of Counties, said a pair of bills the Montana Legislature passed, House Bill 231 and Senate bill 542, appears to have helped some property taxpayers.

At least based on preliminary returns, he said, Montanans living in a primary residence worth $400,000 or so will see some sort of discount.

At the meeting Monday, Sept. 8, Gilbert said all but one county saw an increase in median value for residential properties this cycle, but reappraisals showed higher increases in eastern Montana versus western Montana.

“As the prices get higher on the western side of the state, people started moving over to the eastern side,” Gilbert said.

She said many property owners in the highest value areas, such as the Yellowstone Club, Spanish Peaks, and the Flathead and Big Sky, are raising concerns about their assessments.

However, she said many just need to be told that their taxable value is not the same as the amount of money they owe in taxes.

Gilbert also some people are surprised to see their taxable values go up when they believe their market value has slipped.

“A lot of these higher end areas have experienced a slowing in that market and even a decrease in some of those sales prices,” Gilbert said. “So they get their assessment notice and say, ‘What the heck? My house isn’t worth that.’” But Gilbert said the current assessment is tied to the value of a property on Jan. 1, 2024, and the sales that take place after that date will be reflected in the next reappraisal cycle.

Gilbert also said the number of appeals represents just 1.6 percent of the parcels; she said she believes that means 98 percent of property owners believe their value is correct.

Though the department is hearing from many property taxpayers, it isn’t in the same boat as it was in 2023, when it had 62 percent more appeals than this year.

“I do remind them that we’re not in the same position that we were in back then,” Gilbert said.

Gilbert said the average adjustment to date for most reviews was a decrease of $71,020, and the median adjustment was a drop of $9,700. She said most, but not all, adjustments are drops.

She said the big difference between the average and the median is partly due to high value properties that see reductions, such as a $40 million value cut by $5 million based on incorrect characteristics.

Sen. Greg Hertz, R-Polson, said he still would like to understand how the department values land versus improvements, such as when land values go up even if there aren’t improvements, like buildings being added.

“What methodology do you use to allocate valuations to the land and the improvements?” Hertz said. “Does that include looking at vacant lots?”

Rep. Ed Byrne, R-Bigfork, said he wanted to know if the Department of Revenue was any closer to determining the number of second homes in the state that are owned by Montanans as opposed to outof- staters, earlier estimated at 72 percent, he said.

Together, HB 231 and SB 542 provide for a graduated tax rate with three tiers for homes, and a rebate, and offer relief for homes that are primary residences, but not for second homes.

A “homestead” rate reduction that takes effect in 2026 applies to the first $400,000 in value of a property, but rates for second homes go up.

The idea was to support Montana homeowners, but many Montanans have said just because they own a small cabin doesn’t mean they’re a rich out-of-stater who can afford the steeper rates.

A division administrator said the Department of Revenue will have more information on second homes owned by Montanans after the March 1, 2026, application deadline for the “homestead” rate.

The Department of Revenue also is in the midst of issuing $400 property tax rebates for residential payers, a smaller but more immediate fix in the reform package.

(Applications for rebates automatically enroll property taxpayers into the new rate scheme for 2026.)

Derek Bell, administrator for the Business and Income Taxes Division of the department, said rebates have gone “exceedingly well” this year.

He said the department has received slightly more applications than it did in 2023, most of the applications were filed online, and 97 percent of them have been approved.

Bell also said the number of people who abandoned their application online dropped from 18 percent in 2023 to 5 percent this year, and it’s taking people just 4.5 minutes to fill out the form compared to 12.5 minutes the first year.

“So folks take about four minutes out of their day to get 400 bucks back for the property tax rebate,” Bell said.

Sen. Becky Beard, R-Elliston, said she wanted to know how long hold times were for some seniors who are wary about filling out forms online.

Bell said he didn’t know the answer, but he would check.

“I know that that’s a big problem because our system can only have so many people in the queue at any one time before it kicks them out,” Bell said.

He also said in August when the application opened, the team fielded 3,000 rebate phone calls, a 20 percent increase. But he said if people need assistance, they should contact the department, and it will send staff to help.

Rep. Mark Thane, D-Missoula, said when the 2025 Montana Legislature left town on May 1, it gave the Department of Revenue “a laundry list of tasks to complete,” such as applying new rates, new tiers, and appropriately calculating assessments and getting notices out.

“That was a huge lift, and your department needs to be commended for the effort they put forth to make sure that happened,” Thane said.

He said he wanted to know how many rebate applications the Department of Revenue anticipated overall or how many properties were eligible.

In the fall of 2023, the Department of Revenue estimated that 292,200 homeowners were eligible, but it later revised the figure to closer to 250,000.

Some legislators expressed concern that Montanans, seniors in particular, had trouble with the application or didn’t even know about the rebate.

Monday, however, Bell said he expects 230,000 to 240,000 eligible homeowners this year based on data from 2024.

He said the initial estimates were high because they included properties owned by disqualifying entities such as LLCs, for instance.

However, he said the department has not seen a huge influx of people complaining that they missed out on a rebate in 2024.