42.20.105 CONDOMINIUMS/TOWNHOMES

(1) It is the intention of the department to employ an appraisal methodology for condominiums and townhouse/townhomes (as defined in 70-23-102, MCA) which is consistent with 15-8-111 and 15-8-511, MCA. The terms "townhouse" and "townhome" are interchangeable and, therefore, reference to one term incorporates the other term. The methodology must provide for a separate assessment of each condominium/townhome unit, and allocation of the percentage interest of common elements must meet the market value standard. The methodology must include the consideration, use, and where applicable, the reconciliation of the cost approach, the sales comparison approach, and the income approach to valuation using accepted appraisal treatises and manuals. This rule relates solely to the administration of revenue laws, and nothing in this rule should be construed to affect the legal requirements of any other purpose.

(2) The department will employ the following appraisal and assessment methodology for condominiums/townhomes, except for condominiums/townhomes situated on qualified tax-exempt community land trust property, as set forth in (6), and time-share condominiums, as set forth in (7).

(a) The preferred approach for the appraisal of residential condominium/townhome units is the sales comparison approach, where comparable sales are available. The common elements of residential condominiums/townhomes are inherent in the individual unit values when the sales comparison approach is employed. When comparable sales are not available, the cost approach must be used. In that instance, the condominium/townhome declaration's percentage of ownership interest required by 15-8-511, 70-23-301, and 70-23-403, MCA, should be used to allocate the value. Allocation of value for each condominium/townhome unit will be determined by multiplying the percentage, expressed as a decimal, by the appraised value of the entire condominium/townhome project or by adding the individual unit cost to the individual unit's allocation of those elements deemed common. The common elements are deemed to be inherent in the individual unit's declaration percentage when the cost approach to value is determined and allocated as specified in this subsection.

(b) The preferred approach for the appraisal of commercial condominium units is the income approach where reliable condominium income and expense data are available. The common elements of income-producing condominiums are inherent in the individual unit values when the income approach is employed. When reliable income and expense data are not available, the cost approach must be used. In that instance, the condominium declaration's percentage of ownership interest required by 15-8-511, 70-23-301, and 70-23-403, MCA, should be used to allocate the value. Allocation of value for each condominium/townhome unit will be determined by multiplying the percentage, expressed as a decimal, by the appraised value of the entire condominium/townhome project. The common elements are deemed to be inherent in the individual unit's declaration percentage when the cost approach to value is determined and allocated as specified in this subsection.

(3) Unit owners seeking conversion from a condominium property type to a townhome property type will require changing the legal ownership of the land for the entire complex, on which the unit is located. Therefore, all unit owners of the complex shall acknowledge, consent, and attest to the validity of the property type change.

(4) The unit owner or unit owner's designated entity must file an application for a property type change on a form available from the local department office before January 1 of the year for which the property change is sought. Applications received after January 1 will be considered for the following tax year. For tax year 2012 only, the deadline is October 1.

(5) The department requires the following information before changing a property type from a condominium to a townhome:

(a) a description of the size in square footage or acreage of land associated with each townhome unit;

(b) the amount of remaining square footage or acreage of land associated with each townhome unit;

(d) signatures of all unit owners of the complex in which the property type change is located.

(6) The department will appraise and assess condominiums/townhomes situated on qualified tax-exempt community land trust property using the cost approach method. The cost approach method is appropriate in this situation because it utilizes national cost service manuals and does not factor in the land.

(7) The department will employ the following appraisal and assessment methodology for time-share condominiums.

(a) The entire condominium project will be appraised using accepted appraisal techniques or methods and, as appropriate, the cost replacement manuals identified in rule. The use of accepted techniques or methods means the consideration, use, and where applicable, the reconciliation of the cost approach, the sales comparison approach, and the income approach to valuation.

(b) Any units in a condominium project that are not owned and operated as time-share condominium units will be valued pursuant to the methodology set forth in (2)(a) or (b).

(c) The total appraised value for all time-share condominium units comprising a condominium project will be calculated and assessed to the owner of record (time-share association). Thereafter, it will be incumbent upon the association to allocate its total tax liability among the various parties having interest in the time-share condominiums.

History: 15-1-201, MCA; IMP, 15-7-103, 15-8-111, 15-8-511, 70-23-102, 70-23-103, 70-23-301, 70-23-403, MCA; NEW, 1985 MAR p. 2019, Eff. 12/27/85; AMD, 2002 MAR p. 3723, Eff. 12/27/02; AMD, 2003 MAR p. 1886, Eff. 8/29/03; AMD, 2012 MAR p.1679, Eff. 8/24/12; AMD, 2017 MAR p. 2090, Eff. 11/10/17.