Owning a Second Home in Montana From Out of State in 2026

Montana sets a second home's taxable value at a flat 1.9 percent of market value, many insurance policies count the days it sits empty, and nightly rental rules change at the Bozeman city line. Here is the full carrying picture, line by line.

Buying a second home in Montana is the simple part. Owning one from another state means a property tax rate that can run double a resident's, an insurance clause that counts empty days, and rental rules that change at a city line. This guide covers what an out-of-state owner carries after closing, line by line, with 2026 figures.

The short answer: A Montana second home costs more to hold than the same house as a primary residence, and the difference is predictable. Budget five lines: property tax at the flat 1.9 percent non-homestead rate, insurance written for the months the house is empty, winter care by someone local, the taxes and licenses that come with any rental, and a Montana income tax return if the house earns rent. Everything else is ordinary homeownership.

How Is a Second Home Taxed in Montana in 2026?

Through a flat 1.90 percent rate that sets taxable value from the first dollar, before local mill levies. For tax year 2026, the Montana Department of Revenue applies that rate to second homes, short-term rentals, and vacant residential lots. A primary residence enrolled in the homestead program pays graduated rates starting at 0.76 percent.

The rate produces the property's taxable value, which Montana law defines as market value multiplied by the classification tax rate. Your local mill levies are then applied to that figure, so the bill itself depends on where the parcel sits. The homestead tiers, per the same Department of Revenue page, are 0.76 percent on the first $378,000 of market value, 0.90 percent from $378,001 to $756,000, 1.10 percent from $756,001 to $1,511,999, and 1.90 percent above $1,512,000. A second home generally skips the tiers and pays 1.90 percent from the first dollar.

Because both versions of the same house face the same mill levy, the ratio between the two taxable values is roughly the ratio between the two tax bills. Here is that ratio at four price points around Gallatin County's median of about $800,000 on 2025 sales, as reported in the 2026 Gallatin Valley Housing Report.

The pattern is worth noticing. The multiple is largest on lower-priced homes, 2.5 times at or below $378,000, and shrinks as price rises, because above $1,512,000 the homestead tiers also reach 1.90 percent. A second home at $800,000 carries more than twice the taxable value of the same house owned as a residence. At $2 million, the multiple is closer to one and a half.

Two mechanics catch out-of-state owners. Gallatin County bills property tax in two halves, and the county treasurer's page notes the second half of the 2025 bills was due June 1, 2026. The bill goes to the mailing address on record, and the treasurer directs address corrections to the Department of Revenue's Bozeman office, so confirm that address right after closing. And the Department of Revenue's classification and appraisal notice starts a clock: an owner who disagrees with the value has 30 days from the date on the notice to file a request for informal review. A notice sitting in a mailbox in Montana while you are in another state is how that window gets missed.

For the full homestead rules, see whether you qualify for Montana's reduced homestead tax rate.

Can a Montana Second Home Ever Get the Reduced Rate?

Only by stopping being a second home. The Department of Revenue offers the reduced rate two ways: the owner lives in the house as a principal residence at least seven months a year, or the house is rented to a tenant as the tenant's residence, in leases of 28 days or more, for at least seven months. Either path requires enrolling with the Department. A house used a few weeks a year and left empty otherwise qualifies for neither.

The seven months do not need to be consecutive, per the Department's homestead FAQ. But seven months of living in a Montana house is no longer a second-home arrangement. It raises a residency question for your income taxes that belongs with a CPA in both states before anyone signs an enrollment form.

The long-term rental path is real, and it has a precise edge. The Department's homesteads and long-term rentals page sets the lease threshold at 28 days. Montana's lodging tax, covered below, exempts stays of 30 continuous days or more. A lease of 28 or 29 days sits on both sides of that line: long enough for the property tax rate, short enough to be a taxable lodging stay. Inside Bozeman, the city's own short-term rental definition matters too. Owners planning a rental pattern around either number should confirm how the Department and, where it applies, the city treat their specific lease terms.

What Does a Second-Home Mortgage Require?

Occupancy by you, for part of the year, with you in control of the calendar. Fannie Mae's Selling Guide section on occupancy types says a second home must be occupied by the borrower for some portion of the year, be a one-unit dwelling suitable for year-round occupancy, and remain under the borrower's exclusive control.

The same section says a second home must not be rental property or a timeshare, and cannot be subject to any agreement that gives a management firm control over its occupancy. That last clause is the one that matters in resort markets. A house enrolled in a rental program where a manager controls the booking calendar may not qualify for second-home financing at all, and a lender may underwrite it as an investment property instead, with different pricing and down payment rules. Only your lender can make that call on a specific agreement.

Fannie Mae does allow rental income to exist. If the lender identifies it, the loan can still be delivered as a second home as long as that income is not used to qualify. In plain terms: you can rent the house some, but the lender will not count the rent toward your ability to pay, and the loan assumes the house exists for your use first. Tell the lender your real plan at application. The loan program should match how the house will be used, not the other way around.

Most of this is settled before the offer, which is where competing as an out-of-state buyer in the Gallatin Valley starts.

What Happens to Your Insurance When the House Sits Empty?

Coverage for certain losses can shrink after a set number of empty days, so the policy has to be written for how the house is used. The Insurance Information Institute notes that vacancy clauses limit or exclude coverage when a home is unoccupied for typically 30 to 60 consecutive days.

A sample of the standard homeowners form shows what that can look like. The widely used HO-3 policy, in the illustrative sample form the Institute publishes, excludes glass breakage and vandalism once the dwelling has been vacant for more than 60 consecutive days before the loss. Vacant is a defined term, and policies and courts do not always treat a furnished seasonal home the same way as an empty one, which is one more reason to get your own policy's reading in writing. Its freezing exclusion is lifted only if the owner used reasonable care to maintain heat in the building or to shut off the water and drain the system.

Read that freezing clause twice, because it is where Montana winters meet insurance language. Under wording like that, whether a burst pipe in January is covered can turn on whether you can show the heat was kept on or the system was drained, along with the rest of the policy's terms. Individual policies vary, and some carriers offer seasonal or secondary-home endorsements. Your own policy, its declarations and endorsements, and your agent's written answer, given with your actual occupancy months, are what govern your coverage.

Two more gaps apply to every Montana home, and they matter more when no one is there to watch. In a release dated July 9, 2026, the Montana State Auditor's office reminded owners that a basic homeowners policy does not cover flood damage, that flood insurance typically carries a 30-day waiting period, and that wildfire coverage is becoming less common in standard policies and more expensive. For the carrier market, rates, and your rights as a policyholder, see what buyers should know about home insurance in Montana.

How Do You Care for a Montana House From Another State?

With a local person on a written schedule, and a house prepared to survive without you. Bozeman's January nights average 15.1 degrees Fahrenheit under NOAA's 1991 to 2020 climate normals for the Montana State University station, and the house has to hold through every one.

The ground tells the same story. Inside Bozeman city limits, the city's design criteria for new construction call for footings at least 36 inches deep for a one-story home and 48 inches for two stories, and set a ground snow load of 46 pounds per square foot. Those numbers exist because frost goes deep and snow sits heavy, and an empty house gets no one shoveling a deck or noticing ice at the eaves.

A workable caretaking arrangement has four parts:

1. Heat and water. Decide in writing whether the house stays heated all winter or gets drained. A heated house needs a minimum thermostat setting, a low-temperature alert, and someone who can respond within hours. A drained house needs a qualified person to drain and restart it every season.
2. Visits on a schedule. A local caretaker walks the house at a set interval and after every major storm or cold snap, and keeps a dated log. That log is also your evidence of reasonable care if a claim turns on the freezing clause.
3. The rural systems. A house on a well and septic system needs its own seasonal care, from pressure tanks to septic lines that freeze when unused. The basics are in what to know about well and septic systems in the valley.
4. Summer fire season. The Montana Department of Natural Resources and Conservation describes the home ignition zones as 0 to 5 feet, 5 to 30 feet, and 30 to 100 feet from the house. Defensible space is maintenance someone has to do in June, whether you are in residence or not.

One legal line to know when hiring help. Under MCA 37-56-103, a person may not practice as a property manager in Montana without a license, and the chapter defines property management as the business of leasing or renting real estate for others. The exemptions in MCA 37-56-104 are specific. They include the owner's spouse and close relatives, a person who leases no more than four residential units, and a person managing an establishment licensed as a public accommodation, among others, and a licensed real estate broker may act as a property manager. The state's property management board says the license applies to short-term rentals unless one of those exemptions fits. A neighbor who checks the furnace is not leasing anything. Anyone paid to rent the house is in a different position, and the board can say which rule applies before money changes hands.

Can You Rent Out a Montana Second Home When You Are Not There?

Often, but the answer depends on where the house sits, and three layers apply. The state taxes and licenses nightly rentals, city or county zoning decides whether they are allowed at all, and a nightly rental pays the 1.9 percent property tax rate. Inside Bozeman city limits, new nightly rentals of a whole house that is not owner-occupied are prohibited, and a seller's legacy permit does not survive the sale.

State lodging tax. Montana's state lodging tax is a combined 8 percent lodging facility sales and use tax, 4 percent each, on stays of under 30 continuous days. Booking platforms collect and remit it on their own bookings. Sales outside a platform remain the owner's to report, and the Department's page lists quarterly return dates. Some resort communities, such as West Yellowstone, add a local resort tax on top.

State health license. Montana's public accommodations program names tourist homes and short-term rentals explicitly. In this county the license runs through the Gallatin City-County Health Department, whose lodging page states that licenses are owner and site specific. A seller's license does not transfer with the house.

City of Bozeman. Under Ordinance 2149, effective December 14, 2023 and still in force under the city's development code that took effect February 1, 2026, Bozeman prohibits new Type 3 short-term rentals, meaning the rental of an entire home that is not owner-occupied. A legacy Type 3 permit is forfeited when the property transfers, so a buyer cannot inherit one. The owner-occupied types require the host to live on site at least 70 percent of the calendar year, a standard an owner who lives elsewhere most of the year does not meet.

Unincorporated Gallatin County. There is no countywide ban. Zoning decides. The county's short-term rental FAQ is blunt: if short-term rentals are not mentioned in a zoning district's regulations, they are not permitted anywhere in that district, and there are no use restrictions in unzoned areas. The parcel's zoning, read before the offer, answers the question.

A furnished rental to the same guest for 30 continuous days or more falls under the lodging tax exemption, and leases of 28 days or more for at least seven months can qualify for the reduced property tax rate once enrolled. It is a different business from nightly rentals, with a different mortgage conversation, but for some owners it is the version that pencils.

Does Montana Tax the Rent an Out-of-State Owner Earns?

Yes. Rent from a Montana property is Montana-source income, and a nonresident who has Montana-source income and a federal filing requirement must file a Montana return, per the Department of Revenue's Form 2 instructions.

For tax year 2026, Montana's top individual rate is 5.65 percent, reached above $47,500 of Montana taxable income for a single filer, dropping to 5.4 percent in 2027, per the Department's summary of House Bill 337. Your actual bracket depends on filing status and total taxable income, not the rent alone. How Montana's tax interacts with your home state's, including any credit for taxes paid to Montana, is a question for a CPA who files in both states.

Two related facts round out the picture. Montana has no general sales tax, though resort communities such as West Yellowstone levy their own resort taxes. And a future sale may produce a gain tied to Montana property, with depreciation questions if the house was rented, so the CPA conversation belongs at purchase, not at listing.

When Does an LLC Question Go to an Attorney?

Early, and before closing if possible. An LLC can own a Montana second home, and many owners consider one for liability or estate reasons. Whether it helps depends on facts only an attorney and a CPA can weigh: your home state, your lender, your insurance, and whether the house might someday become your residence.

The facts that are fixed are worth knowing before that meeting. The Department of Revenue states that properties owned by a corporate entity, other than a grantor revocable trust, are ineligible for the homestead rate. For a second home that changes nothing, since the house already pays the 1.9 percent rate. For a house that might become your primary residence in five years, it is a door worth keeping open. Long-term rental properties are treated differently: the same page allows entity-owned long-term rentals to qualify for the reduced rate.

Montana LLCs file an annual report with the Secretary of State, due April 15. The published fee is $20, per the state's filing fee schedule, and the Secretary of State has announced a waiver of the annual report fee for 2026; confirm the current amount in the filing portal. Beyond that, questions about deeding a financed house into an LLC, and whether the name on the deed matches the name on the insurance policy, belong with your attorney, lender, and insurance agent together.

What Should You Do This Week?

Build the five-line second-home ledger, one page, before closing or now if you already own. It turns a vague sense that Montana ownership is expensive into five numbers you can check.

The mechanism is simple. A second home rarely surprises an owner with one large cost. It surprises with five medium ones arriving on different calendars from different offices. Writing them on one page puts the calendars side by side, and the total is what the house costs to hold. Compare that number to how many weeks you will spend there, and the decision about renting, caretaking, or the house itself gets much clearer.

If you are still choosing a house, ask the listing agent for the last two years of property tax bills and utility bills this week. Then recompute the tax line at 1.90 percent, because the seller's bill may reflect the homestead rate you will not get.

The Bottom Line

Owning a second home in Montana from out of state is ordinary homeownership with five extra lines, and every one of them can be priced before you close. Property tax starts from a flat 1.90 percent taxable-value rate, before local mills. Insurance has to be written for the empty months. Winter care needs a local person and a log. Rentals carry their own taxes and licenses and, in Bozeman, a firm limit. Rent earned here means a Montana return. Put all five on one page, and the house's real cost sits in front of you.

Nancy works with owners across Manhattan, Belgrade, Bozeman, and the wider valley who live elsewhere part of the year, and the same page is where those conversations begin.

Frequently Asked Questions

Do second homes in Montana pay a higher property tax rate?

Yes. For tax year 2026, the Montana Department of Revenue applies a flat 1.90 percent rate, which sets taxable value before local mill levies, to second homes, short-term rentals, and vacant residential lots. A primary residence enrolled in the homestead program pays graduated rates starting at 0.76 percent. At $800,000, a second home's taxable value is about 2.25 times that of the same house as a homestead.

Can a second home qualify for Montana's homestead rate?

Not as a second home. The reduced rate requires the owner to live in the house as a principal residence at least seven months a year, or to rent it as a tenant's residence in leases of 28 days or more for at least seven months. Seven months of residence raises an income tax residency question worth reviewing with a CPA first.

Can you rent out a second home in Bozeman?

Not as a nightly rental of the whole house inside city limits. Bozeman's Ordinance 2149, effective December 14, 2023, prohibits new Type 3 short-term rentals, meaning an entire home that is not owner-occupied. Legacy permits are forfeited when the property transfers. Rentals of 30 days or more follow different rules, and unincorporated Gallatin County answers the question through each parcel's zoning district.

Do you pay Montana lodging tax on a vacation rental?

Yes, on stays of under 30 continuous days. Montana charges a combined 8 percent lodging facility sales and use tax, 4 percent each. Booking platforms collect and remit it on their own bookings, and the owner is responsible for direct bookings, filed quarterly. Short-term rentals also need a public accommodations license, which is owner and site specific.

Does homeowners insurance cover a vacant second home in Montana?

Partly, depending on the policy. Vacancy clauses commonly limit coverage after 30 to 60 consecutive days, and the sample HO-3 form excludes vandalism and glass breakage after 60 days vacant. In that form, freezing damage is covered only if the owner used reasonable care to keep heat on or drain the system. Your own policy governs, so ask your agent for its wording in writing.

Do nonresidents pay Montana income tax on rental income?

Yes. Rent from a Montana property is Montana-source income, and a nonresident with Montana-source income and a federal filing requirement must file a Montana return. For tax year 2026, the top rate is 5.65 percent above $47,500 of taxable income for a single filer. A CPA can explain your bracket and how your home state credits it.

Does a caretaker or rental manager need a Montana license?

Someone paid to lease or rent the house generally needs a property manager license under MCA 37-56-103, including for short-term rentals, unless an exemption in MCA 37-56-104 applies, such as close relatives or a manager of a licensed public accommodation. Licensed brokers may act as property managers. Someone who only checks the house is not leasing it.

Should an out-of-state owner hold a Montana second home in an LLC?

That is a question for an attorney and a CPA, ideally before closing. An LLC can own the house, but a corporate entity other than a grantor revocable trust cannot receive the homestead rate if the house later becomes a residence. Montana LLCs also file an annual report by April 15, and financing, deed, and insurance names all have to line up.

This article is general information, not legal, tax, or accounting advice. Nancy Clark and AmeriMont Broker Group are not a law firm or an accounting firm, and nothing here should be treated as advice from one. Laws, tax rules, and programs change, and they vary by state and by situation. Before acting on anything covered here, consult a licensed attorney and/or a certified public accountant in your state for current guidance on your specific circumstances.

Nancy Clark is the Broker and Owner of AmeriMont Broker Group, serving Manhattan, Amsterdam, Churchill, and communities across southwest Montana. With more than $135 million in closed sales and over a decade of experience in Montana real estate, Nancy brings the care of a neighbor and the skill of a seasoned professional to every transaction. Reach her at [email protected] or visit nancyclarkbroker.com.

Nancy Clark
Broker/Owner, AmeriMont Broker Group
Manhattan, Montana
[email protected]
nancyclarkbroker.com