Tell Me, Tallie: How does Montana assess the value of my real estate?
By Tallie Lancey
“[I] shall never use profanity except in discussing house rent and taxes,” reflected Mark Twain. Perhaps Mr. Twain would find good company in Big Sky these days.
If you received a letter from the Montana Department of Revenue last month, you may have been surprised to see the new assessed value of your real estate. You may have even used some of Twain’s irreverent parlance to express yourself. The 2017 Real Property Classification and Appraisal Notice raised some eyebrows in Big Sky. (By the way, if you own property in Montana and didn’t receive this letter, you need to call your county treasurer’s office to verify your mailing address.)
In an effort to mitigate my own confusion about this valuation process, I reached out the Department of Revenue directly. Right off the bat, I was thoroughly impressed with the warmth and sincerity of the folks who work there. They welcome your calls; they want to educate the public. If you’d rather go fly fishing than talk to a government official, I’ll summarize the main points here.
Back in 2014, Montana legislators saw a problem with the effects of the frequency of assessments. They had been using a six year cycle, which meant that during the Great Recession, when Big Sky properties lost about half of their value, homeowners were paying more than they felt was fair. This occurred throughout Montana in areas where mining, tourism and agricultural economic shifts affect local property values. The last appraisal was done in 2015 and those valuations, in Big Sky, were arguably well below market, which is probably why so many folks were surprised by the increase this time around. You could describe the change as creating a slingshot sensation.
Fortunately, the law was changed in 2015 to increase the cycle from every six years to every two years. We saw appraisals in 2003, 2009, 2015 and 2017. The legislators’ intention is to smooth our market fluctuations and create a truer, more real-time picture of Montana’s real estate values.
They have their work cut out for them. In Gallatin County alone, there are approximately 58,000 parcels that 13 appraisers have to evaluate every 24 months.
Those county appraisers fulfill their obligation to assess market value using one of two methods: cost or comparison. During a real estate sale, the title or closing officer populates a Realty Transfer Certificate that denotes the sales price. That information then goes to the county clerk and recorder and is not available to the public. Montana is a non-disclosure state, so only realtors, title plants, and the Department of Revenue have access to sold data. Surprising to many of today’s Big Sky real estate shoppers, Zillow’s Zestimate algorithms have little correlation with true market trends. Capitalism’s invisible hand is extra invisible here. ¬
Once the value of the home and/or land is calculated, the treasurer uses the statewide tax multiplier of 1.35 percent to determine your taxable value. Taxable value is the figure used to multiply by your local mills. If your property value is $500,000, your taxable value is $6750. The notice you received last month estimated your potential taxes owed for 2017 based on the prior year’s millage rate. However, next year’s millage rate is yet to be determined. County commissioners will tally it this fall.
If I haven’t lost you yet, bear with me because I’m getting to the grand finale. It’s possible that the mill rate could go down due to the high volume of new taxable property. In other words, while your taxable value increased, the mill rate may decrease, leaving your taxes somewhat flat. On our own personal residence, my husband and I saw a 1.7 percent annual increase in our taxes over the last nine years, which seems downright gradual in my humble opinion.
But if you don’t like to any pay property taxes whatsoever, you could relocate to Pago Pago in American Samoa where there is no tax on private land. It’s about the same size as Big Sky and I hear their fishing is fine!
Are you wondering why something is particularly unique to our community? You want to know and I’m eager to learn. This column commits to answering your burning questions about why Big Sky exists the way it does. Ask me at email@example.com.
Tallie Lancey is a broker with Big Sky Sotheby’s International Realty and serves on the boards of Big Sky Community Organization, Top Shelf Toastmasters, and the Warren Miller Performing Arts Center.