The entity exclusion, and what it means for association property

Section 15-6-405(3)(a) is flat: “class four residential property owned by an entity is not eligible to receive the homestead reduced tax rate.” The only exception, at (3)(b), is the trustee of a grantor revocable trust, who may apply on behalf of the trust where the dwelling is the grantor's principal residence.

Two consequences, and the first is one boards will hear about:

1. Units held in LLCs and non-grantor trusts lose the reduced rate. In Montana resort and second-home communities that is a large share of the membership, and those units move from as low as 0.76 percent to 1.9 percent while enrolled neighbours in identical units go the other way. Expect that to show up as resistance to assessment increases and as pressure on delinquency, entirely independent of anything in the governing documents.

2. Association-owned property is entity-owned. Clubhouses, pools, maintenance buildings and separately assessed common parcels are owned by the association, which is an entity, so on the face of § 15-6-405(3)(a) they cannot receive the homestead rate. We should be clear about the evidence here: the statute says “owned by an entity” and does not name HOAs, and we found no Department of Revenue guidance on association-owned parcels. Treat this as a reasoned inference from the statutory text rather than a quoted rule, and check any separately assessed association parcel against its actual notice.

Nothing in the 2026 property tax information page or in the adopted homestead rules addresses HOA or COA common area. The governing valuation document is the 2025–2026 Montana Residential, Commercial, and Industrial Property Classification and Valuation Manual, operative for the reappraisal cycle from January 1, 2025 through December 31, 2026.

The rules that run the program

The Department adopted the implementing rules through MAR Notice 2025-430.1 (proposed, Register Issue 21, November 7, 2025) and MAR Notice 2025-430.2 (adopted, Register Issue 1, January 9, 2026), adopting all rules as proposed except one typographic change.⁴ Provisions worth knowing:

• ARM 42.19.204 allows the Department to waive the deadline for extenuating circumstances under § 15-6-418 — the rule's examples are natural disaster, hospitalization, physical illness and infirmity — with documented justification. It also provides that temporary absences (hospital, nursing home, military deployment, work assignment) do not change a principal residence.
• ARM 42.19.203 defines “multifamily dwelling unit” as two or more separate living spaces in a building or group of buildings on the same parcel under one ownership — expressly excluding separate living spaces “owned by separate individuals.” That excludes the separately-owned-unit pattern of a condominium. It also defines a “secondary dwelling unit” to include accessory dwelling units.
• ARM 42.19.206 computes an effective tax rate to three decimal places, then rounds.

The long-term rental reduced rate under § 15-6-411 runs on the same window, requires income and expense information including monthly rent, tolerates short-term vacancy not exceeding 5 months in a 12-month period, and from 2028 requires 20 percent of long-term rentals to reapply each year.

What a board can usefully do, and what it cannot

An association cannot apply on a member's behalf. Enrollment is per owner, requires a declaration under penalty of perjury, the geocode and the applicant's social security number, and terminates at the end of the tax year in which ownership changes, the owner stops using it as a principal residence, or the owner applies for a different principal residence.

What a board can do is put the date in front of people. For tax year 2027 the window is December 1, 2026 to March 1, 2027. That is an obvious line in an autumn newsletter or an annual-meeting packet, and a member who misses it waits a full year — the 2026 portal failure is the precedent for how a missed deadline gets handled, and the answer was an extension granted to everyone, not relief for individuals.

One more thing worth knowing: three separate property tax cap ballot initiatives for the 2026 ballot — CI-129, CI-130 and CI-134 — all failed to gather signatures, and no property tax measure qualified for the November 2026 ballot. One sponsor has said he will try again in 2028. Montana Free Press quotes him: “We just weren't able to get the funds, and we decided without at least some paid signature gatherers it would be futile.” Nothing has been filed for 2028.⁵