If you've spent any time researching whether to buy a rental condo in Big Sky, you already know the headline. There's no city government here to write a short-term rental ordinance, because there's no city. Big Sky is unincorporated, split across Gallatin and Madison counties, and only two of Gallatin County's 22 zoning districts even mention short-term rentals by name. Montana's 2019 Senate Bill 300 goes further, barring homeowners associations from imposing rental restrictions stricter than the ones in place when an owner bought in. That combination has made Big Sky one of the easier mountain markets in the country to operate a nightly rental, and every investor guide to the area repeats it.

None of that changed for 2026. What changed is the number on the tax bill for exactly the properties that freedom was supposed to protect.

The right to rent and the price of exercising it

Montana overhauled its property tax structure with House Bill 231 and Senate Bill 542, signed by Governor Greg Gianforte in April 2025 and fully phased in for 2026 tax bills. The new system splits residential property into two tracks. Primary residences and qualifying long-term rentals (units leased for at least 28 days at a stretch, occupied by the tenant as their home for seven or more months a year) get a tiered rate that starts at 0.76 percent on value up to the statewide median, roughly $378,000 to $395,400 depending on the source, and climbs to 1.90 percent only on the portion of value above roughly four times that median. Second homes and short-term rentals get none of that tiering. They're taxed at a flat 1.90 percent of full assessed value, from the first dollar.

The Montana Department of Revenue's own modeling puts the statewide effect at a cumulative 68 percent increase on non-qualifying properties by 2026, compared with the roughly 14 percent increase those same properties would have seen if the legislature had done nothing. Gallatin County, where most of Mountain Village sits, is one of the counties projected to see smaller relief for qualifying homeowners than the state average, around a 12 percent decrease rather than the 20 to 26 percent some counties will see. That's good news if you live in your Big Sky home full time. It means the gap between what a homesteaded neighbor pays and what a rental-condo owner pays next door is wider here than in most of the state, not narrower.

Put plainly: the same legislature that told HOAs they can't stop you from renting nightly also decided nightly rentals should carry more than double the tax rate of a home someone actually lives in.

Why Hill Condos is the property to run the math on

Mountain Village's Hill Condos are a good stand-in for what this looks like on an actual purchase, because they're built for exactly the business model the new tax rate targets. The subdivision sits a short walk from Big Sky Resort's Mountain Mall and from the Explorer Gondola that opened for the 2025-26 ski season, and studio units there have listed in the $465,000 to $469,000 range, typically marketed with established rental history as part of the pitch.

Run that list price through both rate structures. A $465,000 unit classified as a primary residence or qualifying long-term rental, taxed at the tiered rate starting at 0.76 percent, lands around $3,500 a year in state property tax. The same unit, classified as a second home or short-term rental at the flat 1.90 percent, lands around $8,800. That's roughly $5,300 a year of difference driven entirely by how the unit is used, not by anything about the building, the view, or the location. Assessed value isn't always the same as list price, so treat this as illustrative math rather than a specific unit's actual bill. The gap it illustrates is real regardless.

Layer on the operating side and the stack gets heavier. Guests already pay Montana's 8 percent state lodging tax plus the Big Sky Resort Area District's 4 percent resort tax, a total 12 percent that Airbnb and most platforms collect and remit automatically. That's a tax on revenue, paid by guests. The new 1.90 percent rate is a tax on ownership, paid by the owner, whether the unit rents a single night that year or three hundred.

The timing problem nobody mentions

Here's the friction that actually catches buyers, and it has nothing to do with whether Big Sky allows short-term rentals. Enrollment for the lower, tiered rate runs on a fixed calendar set by the Montana Department of Revenue: the application window for the 2026 tax year ran December 1, 2025 through March 1, 2026. That window closed months ago. Anyone buying a Mountain Village condo today, in August, has missed the cycle entirely and will be taxed at the flat 1.90 percent rate for the rest of this tax year no matter what they intend to do with the property. If the state keeps the same annual pattern, the next window should open in December 2026, for tax year 2027.

That timing gap matters most for the buyer who tells themselves they'll rent the unit long-term to a local tenant and qualify for the lower rate later. Even once that window reopens, qualifying isn't automatic. The rules require a tenant who occupies the unit as their primary residence for at least seven months of the year on leases of 28 days or longer. That's a fundamentally different business than the one that makes a 440-square-foot Hill Condos studio worth close to $995 a night in peak season, the average daily rate AirDNA reported for Big Sky through June 2026. You can have the flexible, high-turnover rental income that made these condos attractive investments in the first place, or you can have the lower tax rate. Montana built a system where a Mountain Village owner generally can't have both.

What this means against a softening rental market

The timing of the tax increase lands at an awkward moment for the numbers underneath it. AirDNA's Big Sky data through June 2026 shows average daily rate up 13.9 percent year over year to around $995 a night, but occupancy down 4.1 percent and overall revenue down 2.1 percent over the same period, with active listings down 6.4 percent. Rates are climbing because fewer units are competing for bookings, not because demand is surging. That's a market where an owner's underwriting has less room to absorb a new fixed cost on the ownership side. A pro forma built on last year's tax bill and this year's occupancy will come in short.

None of this touches the zoning question, because zoning was never the constraint. If you're evaluating a Mountain Village purchase, or comparing it against a long-term rental play elsewhere in Big Sky, the assessed value, the classification status of the specific unit, and where you land relative to the enrollment calendar are the numbers worth pulling before you write an offer, not after.

FAQ

Does an existing Hill Condos owner's tax classification transfer when I buy the unit? No. Homestead and long-term rental classification is tied to the owner's own occupancy or leasing arrangement, filed directly with the Montana Department of Revenue. A new owner has to apply in their own name during the next open enrollment window regardless of how the previous owner used the property.

Does Senate Bill 300's protection against HOA rental restrictions have any bearing on my tax rate? No. SB 300 governs what an HOA can and can't restrict about your right to rent. The 2025 property tax law is a separate state tax statute. An HOA cannot stop you from renting nightly, and the Department of Revenue will still tax that nightly rental at the flat 1.90 percent rate. The two laws solve different problems and don't offset each other.

If I want to switch a Mountain Village condo to a long-term rental to qualify for the lower rate, when can I actually do that? You can operate it as a long-term rental at any time, but the tax classification only updates during the state's enrollment window, which runs December 1 through March 1 each year for the following tax year. Missing that window means paying the flat rate for the full year regardless of how the unit is actually being used.

This is exactly the kind of math that looks straightforward on a listing sheet and gets complicated fast once you're comparing a specific unit's assessed value, its rental history, and where the enrollment calendar actually sits relative to your closing date. If you're weighing a Mountain Village purchase, or trying to figure out whether a long-term lease pencils out better than a nightly rental strategy under the new rate, Mia Lennon can walk through the specific numbers on a property before you make an offer.