Homes, land andcommercial property.Homework done.

There's an old saying here: whiskey's for drinking, water's for fighting. Exempt wells are where most of the fighting happens right now.

Montana runs on prior appropriation. First in time, first in right, and every drop in a stream or aquifer is already spoken for by someone with an older claim. Normally, taking new water means a permit from DNRC and proof you won't hurt those senior rights. The exempt well is the exception the Legislature carved out in 1973 for small users: pump 35 gallons per minute or less and no more than 10 acre-feet a year, and you can drill without a permit. That's how roughly 141,000 rural homes and small subdivisions in this state get their water, and for a single house on acreage it still works fine.

The fight is over what happens when a developer stacks several exempt wells on one project. The statute says a "combined appropriation" from the same source over 10 acre-feet needs a real permit. For a decade DNRC read that loosely, and subdivisions got approved on a cluster of exempt wells. In February 2024 a district judge in the Horse Creek Hills case said that reading was wrong, and DNRC now treats every phase of a multi-phase development as one combined appropriation sharing a single 10 acre-foot limit. DNRC also stopped issuing the subdivision water letters DEQ used to rely on. Some existing subdivisions have been told their lots may not have the water they thought they had.

Then the 2025 Legislature passed HB 681. As of January 1, 2026, anyone planning to use an exempt well has to file a Notice of Intent with DNRC first, pay $400, and wait for a decision within 10 business days. The bigger reform bill that would have closed fast-growing valleys like ours to new exempt wells failed. In November 2025 a coalition that includes the Gallatin irrigators, Farm Bureau, Trout Unlimited and the League of Cities and Towns sued the state to force the issue, and the interim water committee is drafting bills for the 2027 session. None of this is settled.

What it means for you: a house on a lot with an existing, filed well is usually fine, but confirm the well actually has a water right filing in DNRC's system, because the driller rarely did that for the owner. If you're buying land to split, or a lot in a subdivision that depends on shared or future exempt wells, the water question has to be answered before the price does. I read the water rights on every parcel I touch and I'll walk you through what's filed, what's missing and what the pending cases could change.

Usually one, and sometimes the answer is no. An agricultural covenant is a deed restriction that let the parcel be created without going through full subdivision review, on the condition that it stays in agricultural use. Residential use is limited, and lifting the covenant takes approval from the county commission, which is not a formality. These parcels can be a great buy at the right price, but the price has to reflect what you can actually do with the land. I'll read the covenant with you.

Maybe. It depends on the zoning, the county's subdivision regulations, access, water and septic, and whether any exemptions apply. The honest first step is a feasibility look, which is why I built Montana Platbook. Send me the parcel and I'll tell you what's realistic, what it would cost to find out for sure, and whether it's worth it.

A 1031 lets you defer capital gains tax when you sell investment property and buy another, as long as you identify replacement property within 45 days of closing and close on it within 180. The timeline is the hard part. Yes, I help with the replacement search, on and off market, and I'd rather start that search before your sale closes than after. Your CPA and a qualified intermediary handle the tax mechanics; I handle the real estate.

The short version: Montana moved from one flat residential rate to a tiered system, cut the rate on primary homes and long-term rentals, and raised it on second homes and short-term rentals. The two bills were HB 231 and SB 542, and they phase in over two tax years.

Before 2025, every home in the state was taxed on 1.35% of its appraised value. For the 2025 bills you got in November, that became a three-step ladder based on dollar value.

Starting with the 2026 bills, the ladder is tied to the statewide median home value (set at $395,400) and it splits by how the home is used. A "homestead" is your primary residence, or a rental leased for at least seven months a year on leases of 28 days or more.

Rates are the share of appraised value that's taxable; the local mills then apply to that. Commercial property went to 1.5% up to about $2.1 million and 1.9% above.

What that means in practice, by the state's own estimates: owner-occupied homes down roughly 18% from 2024, long-term rentals down about 22%, and non-homestead homes up about 68%. Your actual bill depends on your mills, so Bozeman, Big Sky and Ennis all land differently.

Three things to do. First, if you own and occupy your home, make sure you're enrolled for the homestead rate at homestead.mt.gov. Owners who got the 2025 rebate were enrolled automatically; everyone else, and every landlord, has to apply, and the deadline for the 2026 bills was March 1, 2026. Late applicants may still be able to appeal for a refund. Second, if you own a second home or a short-term rental here, budget for the 1.9% rate and talk to me before you decide whether to convert it to a long-term rental, sell, or hold. Third, if you think your appraised value is above market, you can appeal it with the Department of Revenue, and I'll pull the comparables for you.

Agricultural land kept its 2024 treatment, and the bill to tighten the $1,500 income threshold for ag status failed. The 2027 session will almost certainly revisit all of this, which is the main reason I write the Legislative Watch.

It's a short report on what your property is likely to sell for and why: recent comparable sales, what's on the market against you, and anything in the zoning, title or condition that changes the number. It's free, it's in writing within three business days of our walk-through, and there's no obligation to list with me. It is not an appraisal; if a lender or a court needs one, I'll point you to a good appraiser.