Did you receive a property reappraisal letter?
Like you, the GoPrime Bozeman team recently got letters from the Montana Department of Revenue regarding property reappraisals and their effect on property taxes. We’re sure you were like us and wanted to drop that letter like a hot potato! But it’s not all bad news. Let us explain!
What is the effect of property reappraisals on property taxes?
While property values have certainly risen since the last reappraisal, your tax bill will likely rise less than your property value. The state’s estimate for your new bill is based on your new assessed value using last year’s mill rate. But here’s the catch: your county won’t be able to use the previous year’s mill rate!
All that increase in property value means your county’s tax base has increased. Therefore, counties will have to reduce their mills to match their current budgets. Why? State law caps the growth of property tax revenue in addition to school budget growth. Voters must approve any increase over and above that cap.
What is the bottom line?
Your tax bill will rise, but the increase will likely be much less than what the state estimates in its reappraisal letter. The Montana Free Press has an excellent article explaining all of this in more detail and how property taxes work in Montana generally here.
Do I have to do anything with my mortgage escrow account?
You don’t have to do a thing! The county will send your mortgage servicer the new bill, or your servicer will pull it yearly on their own. They will adjust your escrows accordingly.