My Property Tax Bill Just Went Way Up In Bozeman - What Can I do about it? Is it correct?

If you think you are going to have a huge increase in your property taxes after receiving your valuation, you may only be half right.  Read on.

How will the recent reappraisal and increasing property values affect your taxes?

The bad news is that your property taxes will probably increase.  The good news is that in most cases, the increase in your tax bill will only be a fraction of your property’s increase in value.  Read on...

Property tax appraisal letters were recently mailed by the Montana Department of Revenue.  You may appeal the valuation if you disagree with it.  The instructions to initiate an appeal are in the letter you received.  If you wish to appeal, do not delay as you only have 30 days from the date in the letter to do so.  Be aware that if you appeal, the valuation may increase if your property was undervalued.

Home and commercial property values have increased rapidly, so it is no surprise that appraisals have followed suit.  Taxpayers are rightfully concerned about their upcoming tax bills.  Keep in mind that your estimated tax bill in the appraisal letter is required by state law to be based on the number of mills levied last year.  Due to increased property values, many cities and counties must reduce their mill levies because of a statewide cap on growth of property tax revenues.  School district budget growth is also capped and they, too, will likely need to reduce their mill levies due to increased values.  Consequently, your tax bill in November may be significantly lower than the estimate in your appraisal letter.   

An increased value is only part of why your property taxes increase.  Most of the property taxes you pay fund local governments, various local taxing districts like rural fire districts, and local schools.  If local elected officials or school districts decide to raise their mill levies to create more tax revenue than the cap allows, the increase must be approved by voters.  Carefully review your ballot, whether for primary, general, school district, or special elections as it may contain proposed property tax increases.  As a voter, you decide whether the capital investment or services to be funded are worth the cost.

The State of Montana also levies property taxes to equalize local school funding and for the university system, though the amount is only about 15% of your tax bill.  One important difference is that growth of the revenue from these state mills is not capped, and the state will receive a windfall due to increased values.  

Earlier this year, the Montana Legislature passed a law that will go into effect in 2025 that will direct $30 million-plus per year to county retirement funds which will reduce property taxes.  They also increased the income and value limits for the Property Taxpayer Assistance Program, which will help fixed income homeowners.  In addition, the legislature passed law requiring the State of Montana to provide income and property tax rebates to Montana taxpayers.  Still, there is much more to be done towards tax reform that provides broad and long term relief for property owners.

Don't hesitate to consider having your valuation reviewed but it can cut both ways.  And let's hope the mill rate decreases!

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