It’s important to understand that the Homestead Reduced Tax Rate is not the same as a Montana Homestead Declaration/Exemption.
A Montana Homestead Declaration/Exemption is a legal filing that protects a portion of your home’s equity from certain creditors and is recorded with the Clerk and Recorder in your county.
By contrast, the Homestead Reduced Tax Rate affects how your property is classified for property tax purposes, which directly impacts how much property tax you owe. In short, one protects your equity; the other determines your tax bill.
What You Need to Know—Before It’s Too Late
According to the Montana Department of Revenue (DOR), the Homestead Reduced Tax Rate applies to two types of property:
1. Principal Residence (Homestead)
This applies if you:
- Live on the property as your primary residence for at least 7 months of the year, and
- You or your revocable grantor trust owns the property.
If you received the $400 property tax rebate in 2025, you were likely automatically enrolled in the homestead classification. If you did not receive the rebate—or aren’t sure—you must enroll by March 1 by filing the required “Primary Residence” online form, or printing off the “Principal Residence paper application” form found at the Montana Department of Revenue site.
A good rule of thumb: log onto the MT Department of Revenue, create an account to file your form electronically, and through this process you will be able to determine if you’ve already been enrolled in the homestead classification.
2. Long-Term Rental Property
This applies to residential property that:
- Is rented for at least 7 months per year, and
- Has rental periods of 28 days or longer per rental period.
There are some less common scenarios that may qualify under this category and may require additional review.
If your property qualifies, you must also file by March 1 using the “Long-term Rental” form found at the Montana Department of Revenue site.
Properties That Do Not Qualify
Properties that do not meet the criteria above—such as:
- Second homes that are not rented out pursuant to long-term rental requirements
- Vacation homes not rented out pursuant to long time rental requirements
- Short-term rentals
will not receive the reduced tax rate. According to DOR projections, these properties are expected to see significant property tax increases, potentially averaging 68% or more.
Be sure to consult the Montana Department of Revenue for details and important FAQs, or contact an attorney at Worden Thane P.C. with questions.