AT MTFP - Property Tax Explained

Property taxes are the primary way Montanans pay for local government services including schools, law enforcement and fire departments, among other things. But the math used to calculate them can be quite complex, making it hard to understand who’s paying how much and why. It can also be hard to know what’s going to happen to your taxes when your home’s value rises.

AT MTFP - Property Tax Explained
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Read the article at the Montana Free Press by Eric Dietrich
“The tax system divides the cost of the school budget among the properties in the tax base. Here’s how that math works:
1) The assessed value of each property is estimated by the Montana Department of Revenue. That can be a complicated process, but most homes are assessed at the department’s best estimate of what they would sell for on the current market. In most cases, property values include the value of both structures and the underlying land.
2) The assessed value is multiplied by a property class rate to produce its taxable value. The property class rate is different for different types of property (a complete list is here). The commercial properties in our example are converted to taxable value at a higher rate, 1.89%, than the residential properties, which are converted at 1.35%. Those rates are set by the Legislature to balance tax burden between different types of property.
3) Tax bills are allocated proportionally to each property’s share of the tax base. This is typically done by calculating millage rates (more on those in a bit), but the important thing to understand is that your taxes are proportional to your taxable value. So, for example, a home that represents 8% of the tax base is responsible for 8% of the school budget. Of course, in the real world, with many more taxable homes and businesses in a school district, your share of the school budget is much smaller.”

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