BILLINGS — Montana's new homestead property tax law is drawing concern from Realtors and property owners who say the legislation unintentionally creates higher costs for owners of short-term rentals, inherited homes and long-held properties.
The law, which was passed by the 2025 Legislature, aims to reform property taxes in Montana and will decrease taxes for as many as 80% of Montanans.
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But to provide that tax decrease for those property owners, President of the Montana Association of Realtors Angela Klein-Hughes said other property owners will see increases.
"Problems with reallocation is there's always unintended consequences and a victim of that reallocation," Klein-Hughes said.
Klein-Hughes, a Laurel-based broker at A Haus of Realty, said the first of three unintended consequences is short-term rental owners such as Billings resident DeDe Stoner, who bought a rental property three years ago with an eye toward retirement. She now owns two.
"Like everybody else who doesn't really know much about short-term rentals, I was like, this is a great way to make a lot of money," Stoner said. "A, it's not. B, it's been a learning experience."
Stoner could now face double the current taxes on her two rental properties as part of the tax-reform bill.
"Immediately, I just thought how unjust this is. It's completely unfair," Stoner said. "It's basically restricting the way they can use the property they own, and I really have a hard time with that."
The second and third unintended consequences affect family homes either passed down to the next generation or bought decades ago when the property was valued for much less. Under the new tiered system, high-value homes assessed at over $756,001 will see a higher rate.
"Their tax consequences are going to be so severe; are they going to be able to maintain staying in the home they've owned for 30 years because of the value of it?" Klein-Hughes said.
Klein-Hughes said there are potential market impacts as well.
A new buyer looking to purchase a former short-term rental would be on the hook for the increase in taxes if the home is sold after March 1, when the taxes for the following year are locked in.
"Homeowners will not be able to afford that tax consequence as a first-time buyer. They just will not," Klein-Hughes said. "This will be something that the government is going to have to look at."
For Stoner, the future remains uncertain as she is weighing the option of selling her properties.
"You don't buy a rental property to write a check every month," Stoner said.
