Navigating Montana’s New Property Tax Rules: What Vacation-Rental Owners Need to Know

If you own a vacation home or operate a short-term rental in Montana, big property-tax changes are on the horizon. Recent reforms (House Bill 231 and Senate Bill 542) are reshaping how residential properties are taxed, especially second homes and short-term rentals.

At SkyRun Vacation Rentals–Whitefish, we’re keeping a close eye on these updates so our homeowners can stay compliant, avoid surprises, and protect their rental returns.

What’s Changing

Montana is introducing a new tiered tax system that clearly separates:

• Primary residences and long-term rentals (rented 28+ days at a time for at least 7 months per year)
  Second homes and short-term rentals (properties used seasonally or for nightly/weekly guests)

By 2026, this distinction will be fully phased in.

Key differences:

• Primary residences / long-term rentals qualify for lower, tiered rates (~0.76 – 1.10%).
• Second homes / short-term rentals will pay a flat 1.90% rate on their full assessed value.

That means a vacation rental valued at $500,000 could see property taxes climb from roughly $7,800 to $11,000 a year—a 40-50% increase depending on county mill levies.

What This Means for Vacation-Rental Owners

For SkyRun homeowners and other STR hosts in Flathead and Lake Counties, the new law could significantly impact annual carrying costs.

• Operating costs will rise. Expect higher annual taxes starting 2026.
• Profit margins may tighten. You may need to reassess nightly rates, seasonal minimums, or occupancy strategies.

Example: Flathead County

Turning Tax Changes into Opportunity

Montana’s new property-tax structure is shifting more of the burden onto second homes and short-term vacation rental making it more important than ever to have a professional, data-driven partner managing your property.

At SkyRun Whitefish, we don’t just handle bookings, we maximize performance. Our sophisticated revenue-management systems use dynamic pricing algorithms, local market data, and seasonal demand forecasting to ensure your property earns top-of-market revenue on every booking. By optimizing nightly rates daily based on demand, occupancy trends, and competitor data, we help homeowners capture 15–30% more revenue than static pricing models, offsetting increased tax costs with stronger, smarter income.

But we go beyond pricing. Our custom rental strategies are designed to make your property work harder for you year-round:

• Optimized occupancy models that balance peak-season pricing with off-season stays to increase annualized income.
  
• Local, boots-on-the-ground expertise to position your home competitively within the Whitefish and Flathead Valley market, capturing the right guests at the right price, every time.
  
• Transparent performance dashboards that let you see your revenue growth and projections in real time.
  

While the new laws raise costs, SkyRun’s advanced systems and local strategy can more than offset the impact. Our approach turns what could be a challenge into an opportunity helping you preserve (and even grow) your property’s profitability under the new structure.

With SkyRun, you’re not just managing a vacation rental, you’re running a high-performing, tax-smart investment.

Whitney Elenbaas

Whitefish, MT

Owner of SkyRun Whitefish

406-730-7712

whitefish@skyrun.com

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