Natural Disaster Property Tax Reduction FAQ's
Real Property Dwellings, Real Property Improvements, Trailers and Mobile Homes and Personal Property
Q. What is included in the term "natural disaster"?
A. Section 15-16-611(6), MCA, states that "natural disaster" includes, but is not limited to, fire, flood, earthquake, or wind. A fire is considered a natural disaster regardless of the origin of the fire. However, if the taxpayer is convicted of arson for burning the property, property taxes may not be adjusted. If the taxes had already been adjusted prior to the conviction, the original amount must be collected.
Section 15-44-104(1), MCA, states forest lands upon which, at any time after December 31, 1993, trees are destroyed by fire, disease, insect infestation, or other natural disaster so that the lands affected will not meet minimum stocking requirements are eligible for a reduction in value for the first 20 tax years following the loss.
Q. Which section of law provides for the reduction of property tax for the total or partial destruction, by natural disaster, or real property dwellings, real property improvements, trailers and mobile homes, and personal property?
A. Section 15-16-611 and 15-44-104, MCA
Q. What types of property are included in term "real property improvements"?
A. The term includes dwellings and outbuildings on residential, agricultural, or forest land, and commercial/industrial buildings and structures.
Q. To what extent must the destruction demonstrate the affected properties are eligible for the reduction allowed in 15-16-611, MCA?
A. To be eligible for the reduction, the property must have been rendered unsuitable for its previous use by the natural disaster.
Definitions used by the department in determining natural disaster tax relief eligibility:
Partial Destruction means a portion of the structure(s) or personal property has been made uninhabitable or has been rendered unusable or unsuitable for its previous use; the repair is not immediately accessible for repairing or replacement. This does not include replacement or cleanup of items which are short term or an inconvenience.
Total Destruction means the entire structure(s) or personal property has been made uninhabitable or has been rendered completely unusable or unsuitable for its previous use, including a state beyond use or repair.
Uninhabitable means not capable of being lived-in due to long term damage or destruction of the property, typically determined by health department officials, fire inspectors or building inspectors and may result n the condemnation of the property.
Unsuitable for previous use means the use the property is intended for no longer can be utilized or is not appropriate,suitable or fit for that use. Not to be confused with an inconvenience or non-desirable.
Q. Is there an application deadline for this reduction?
A. No, there is no specific deadline for filing an application for these types of losses. However, the application must be filed during the current tax year.
Q. How is the reduction in taxes calculated for destroyed real property dwellings, real property improvements, trailers and mobile homes and personal property?
A. The amount or reduction for destroyed real property dwellings, real property improvements, and trailers and mobile homes is based on a pro-ration of the taxes. It is calculated by determining a ratio of the number of days the property was impacted by natural disaster in the tax year, divided by 365.
The amount of reduction for destroyed personal property is also based on a proration of the taxes. It is calculated by determining a ratio of the number of days the property was impacted by natural disaster in the tax year, divided by 365. To enable the proration calculation, the taxpayer is required to notify the department if the personal property is replaced in that same year. If a taxpayer fails to notify the department within 30 days from the date of the replacement of the personal property, they are subject to the penalty provided in 15-1-303, MCA. (This allows for the department to add to the assessment an amount not to exceed 20% of the assessment as a penalty for the refusal or neglect.)
Q. If the property structure or business equipment is destroyed after the property taxes have been paid for the current year, am I entitled to a refund?
A. Yes, the taxpayer is entitled to a refund of the amount of tax paid as indicated in Step 3(c) on the application form. Section 15-16-612, MCA allows for the refund.