Commercial property is defined as property used or owned by a business, a trade, or a corporation (public benefit, mutual benefit, or religious), or used for the production of income, and includes industrial property. The industrial property included within this definition is defined as all land used for industrial purposes, improvements, and buildings used to house the industrial process and all storage facilities. 15-1-101, MCA.
Commercial property includes:
The department relies on commercial property owners to provide their income and expense information to assist in the department's determination of fair and equitable commercial property values statewide. The department analyzes the data submitted to determine typical market rents, expense percentages and capitalization rates of similar commercial properties. The data is used to develop specific property type income models used statewide in the mass appraisal process.
The department keeps all income and expense information reported confidential, as provided in 15-8-120, MCA. Reporting income and expense information is not required. However, if commercial property owners do not provide the information, it may limit their ability to appeal their property value determined by the department for tax purposes. 15-1-303, MCA
Commercial property owners can report online or submit a paper reporting form.
I. Submit a Report Online
Follow the steps below. Before you begin, it will be beneficial to have the letter we mailed to you nearby as you will need the property geocodes listed on the back side of the letter.
II. Submit a Paper Form
If you prefer to submit a paper form, download the appropriate income and expense survey provided below.
Submit a survey for each property you own. Before you begin, it will be beneficial to have the reporting letter mailed to you nearby as you will need the property geocodes listed on the back side of the letter.
Important! When reporting income, please do not include income associated with a business occupying the property. If you occupy the property, provide only the operating expenses.
Mail completed surveys to the local Department of Revenue field office servicing the county where your commercial property is located. Contact information can be found at MTRevenue.gov/contact.
When determining the market value of commercial property, as defined in 15-1-101, MCA, department appraisers will typically use the income approach or the cost approach.
The income approach is the preferred valuation method for commercial property when sufficient and relevant income and expense data is available for the department to develop income models. Buyer demand for a commercial property is dependent on its ability to generate and maintain an income stream. In the income approach, the anticipated future benefits (income or rent) of property ownership are converted into an estimated present worth (current market value) by applying a capitalization rate to net income.
The department will use the cost approach when income and expense data is not available. The cost approach is also used to value unique properties or when an income model does not exist for a property’s use type. The cost approach is considered the appropriate approach to value when the department determines a property’s land value is the predominate factor of its overall land and building value.
The department generally does not develop sales comparison market models for commercial property due to the lack of similar sales data.
The final valuation method chosen will be the method which most accurately represents 100 percent of market value, as defined in 15-8-111, MCA.
For more information on the department's commercial property valuation process, refer to the Montana Residential, Commercial, and Industrial Property Classification and Valuation Manual.