CI-121 Example

A simple example.

CI-121 in action

In 2002, assume a couple named Joe & Jill Montana bought a home in Belgrade Montana for $150,000, and now in 2022, the market value of that home is $500,000. Joe & Jill feel pretty good about their investment as one day they might sell the home and realize the $350,000 in equity gains, or better, they may pass the home on to the children they raised in Montana.

Since 2002, Joe & Jill have been employed locally in Belgrade and both earn comfortable salaries. During their 20 year employment their salaries have increased, but only a bit more than the rate of inflation.

Under current Montana law, Joe & Jill will be paying property tax based on the market value of their home at $500,000, after it's assessed again in Jan of 2022. Assuming a 1% effective property tax rate, Joe & Jill will have a tax burden of $5,000 per year or a little more than $400 per month.

But Joe & Jill still hold the same jobs. They bought the house for $150,000 as that is what they could afford at the time, and they have realized NONE ($0) in financial gains as a result of the appreciation and equity in their home because they haven't sold it.

Shouldn't Joe & Jill be rewarded for staying in their home for 20 years and raising their family in Montana?

It's simply not fair, nor logical for Joe & Jill to be paying property tax on the $500,000 market value of their home.

Assuming initiative 121 was in place in 2002 and a 1% effective property tax rate. In year one (2002) or acquisition year, Joe & Jill would have paid 1% of $150,000 or $1,500 in property tax, and now 20 years later (2022), assuming a 2% inflation rate, Joe & Jill would be paying 1% of $222,000 or $2,220 in property tax, about $185 per month.

If and when Joe & Jill sell their home for $500,000, that acquisition value will be the new base, and the new owner will have the higher tax burden of $5,000 per year. If the new owner is qualified to pay $500,000 for Joe & Jill's home, then they are qualified to burden the higher property taxes as well.

And we hope the new owner's take advantage of initiative 121, stay in the home 20 years, and raise another generation of Montanans!