Montana Real Estate Transfer Tax*
Montana is one of 15 states that does NOT have a real estate transfer tax, but, instead, parties to a Montana real estate transaction must file a Realty Transfer Certificate, required by Montana law.
Other states without realty transfer taxes: Alaska, (California†), Idaho, Indiana, Louisiana, Mississippi, Missouri, Kansas, North Dakota, New Mexico, (Oregon♦), Texas, Utah, and Wyoming.
When Montana real property is transferred, a transfer certificate, various tax returns, and reports must be filed. A Montana Realty Transfer Certificate (here), often called an RTC, must be completed before a deed transferring real estate is recorded with a specific Montana county Clerk and Recorder. An RTC is usually completed by the closing real estate agent. The Montana Department of Revenue uses the realty transfer certificate information to administer property taxes and to ensure income tax compliance.
“Transfer” includes sales, exchanges, gifts, inheritances or any other transaction where the property changes ownership. If you receive income from Montana real estate, you are required to file a Montana tax return to report rents you receive.
A Montana tax return must be filed the year the gain is recognized for federal income tax purposes. A tax return must also be filed to report rents received from Montana property. A “Montana pass-through entity” return must be filed the year the gain is recognized for federal income tax purposes if the property is transferred by a pass-through entity (such as an LLC, partnership or S. corporation).
Also, if a taxable gain is realized but deferred to a later tax year, a Montana tax return must be filed the year the gain is recognized for federal income tax purposes. Examples of transfers that permit a gain to be deferred are installment sales, Section 1031 (like-kind) exchanges, and Section 1033 involuntary sales.
If you transfer Montana real property, you are required to file a Montana tax return to report any gain that is recognized for federal income tax purposes.
Montana Source Income
Montana source income is defined specifically in Montana Law 15-30-2101 and Montana Law 15-31 MCA (Montana Code Annotated). In simple terms, Montana source income is income or gain from property in Montana or from transactions or activities that take place in Montana.
Every year, thousands of parcels of Montana properties are transferred. When a Montana property is transferred, a Montana tax return must be filed to report any recognized taxable gain. Rents received from Montana real estate also are Montana source income, and must be reported.
Nonresidents are required by law to file Montana tax returns if they have Montana source income to declare. Research shows that many nonresidents improperly report to the State of Montana the taxable income on the sale or rental of Montana property, because they do not understand their Montana tax-filing responsibilities.
Are you conducting business inside and outside the state of Montana? If so, Montana Source Income includes:
1. All Montana source income passed through from another entity
2. The apportionable income apportioned to Montana
3. The non-apportionable income allocated to Montana
Note: Rents received from Montana real estate also are Montana Source Income and must be reported.
Because Montana residents are required to report all of their income, regardless of where it is earned, non-reporting is rarely a problem with residents. If a Montana resident becomes a nonresident, the Montana source income rules will apply.
Also Visit Montana Property Taxes and Montana Tax Information posts.
Or have a question? The Montana Department of Revenue is happy to provide you with additional information about Montana source income. If you have questions or need assistance from them, please call (406) 444-6900.
The Montana Department of Revenue’s administrative rules on source income are located at Montana Department of Revenue, as are downloadable Montana tax forms. Or, to request that forms:
• Call (406) 444-6900, or
• Go to Montana Current Year Business Forms
• Write to Montana Department of Revenue, Attn: Forms Distribution, P.O Box 5805, Helena, MT 59604-5805
†California counties and cities can opt to collect a California real estate transfer tax.
♦Oregon has no real estate transfer tax except Washington County.
ADDITIONAL MONTANA STATE RESOURCES:
- MONTANA INCOME TAXES
- PROPERTY TAX IN MONTANA
- MONTANA STATE TAXES
- REAL ESTATE TAXES IN MONTANA
- ESTABLISHING MONTANA RESIDENCY
- MONTANA RIVERS
- RECREATIONAL OPPORTUNITIES IN MONTANA
BOZEMAN REAL ESTATE REPORTS
*All information contained herein is derived from sources deemed reliable, however, information is not guaranteed by Taunya Fagan Bozeman real estate, its agents and brokers, or ESTATE House.
