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New construction in Missoula

The 2016 Scott Street Village housing development, which created 23 new single-family homes and five town homes on Missoula's Northside, is an example of the growth that is now showing up in the city's property tax values.

When it comes to taxes, there’s some confusion about the difference between the assessed market value of homes in Missoula County and the median sales price of homes that sold in 2017.

Property taxes are based on the assessed market value of a home, which is measured by the Montana Department of Revenue’s Property Assessment Division, and local governments use these certified values to determine property taxes.

Taxes are not based on the median sales price in any given community, and that number only relates to homes that were listed for sale over a given time period.

The median sales price of the 1,543 homes sold in Missoula County during the year 2017 was a record $268,250. For the month of October, the Missoula Organization of Realtors lists it as $293,776. A median is the number in a series with an equal number of values both above and below.

In Missoula County, where housing sales prices have jumped more than 30 percent since 2010, the price a house can sell for on the open market is often much different than its assessed market value.

For example, a home in Missoula at 517 E. Florence St. was recently listed at $358,000. That house’s assessed market value is $218,200, the amount that its property taxes are based on. It’s impossible to know how much the house actually sold for, because Montana is one of just a few nondisclosure states where that isn’t public information. Either way, the assessed market value is likely nearly $150,000 lower than the house’s final sale price.

Real estate agents in Missoula have told the Missoulian over the past few years that houses are selling for close to their listing price or in many cases, above the listing price due to high demand and few options.

Some houses may have had improvements like a bathroom remodel or kitchen remodel that raise their sale price but do not trigger a reassessment, because only significant improvements such as additions trigger a reassessment. Property in Montana is assessed every two years.

According to the U.S. Census Bureau, the 2017 median assessed market value for owner-occupied homes in Missoula County was $295,600, with a margin of error of about $10,000. The Bureau’s American Community Survey found that there were 28,256 owner-occupied homes in Missoula County.

However, those statistics don’t take into account the roughly 22,000 renter-occupied homes in Missoula County, as estimated by the U.S. Department of Housing and Urban Development in 2016. If the renter-occupied houses in Missoula County were included, the median assessed market value for all homes in the county might be much different.

Of the owner-occupied homes, 2,045 had a value of less than $50,000. There were about 3,000 homes with values between $50,000 and $200,000, and 9,879 homes with values between $200,000 and $299,999. Another 9,929 homes were valued between $300,000 and $499,999. And on the upper level, 3,500 homes were valued between $500,000 and $1 million, with 272 homes valued at $1 million or more.

Sanjay Talwani, a spokesman for the Montana Department of Revenue, said his office would try to get the median assessed market value for all single-family homes in the county but it could take awhile.

“Properties are measured in different ways,” he said. “There might be a vacant lot with an improvement that’s just a garage, not a residence, and our data may not be able to distinguish between some of these things when assessing values. The Department of Revenue sets valuations based on a whole different set of data.”

Talwani said property value assessments follow the standards and methods of the International Organization of Assessing Officials and involve large amounts of data and computer-driven analysis, particularly regarding income (or potential income) from properties; costs; and sales prices in the area of the property.

The total assessed market value of all property in Missoula County, including commercial property, railroads, energy infrastructure and telecommunications is $14.3 billion.

In the election this past week, county voters passed a 20-year, $15 million general obligation open space bond that will add an additional $13.46 per year to the property tax bill of a home in Missoula County with an assessed market value of $200,000.

Voters also passed a Conservation and Responsible Stewardship Perpetual Mill Levy of 4 mills that would apply only to property owners within city limits, and would add $10.80 per year to a $200,000 home in perpetuity.

County and school district voters have approved seven general obligation bonds since 1996 that add a combined roughly $300 to the tax bill of a home valued at $200,000. However, this is the last fiscal year that a $17.1 million jail bond will be on tax rolls.

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