The Montana Supreme Court recently ruled on a significant property tax valuation case involving Kenneth O’Brien, who represents the estate of Maxine O’Brien and the C. Mark Hash and Therese Fox Hash Revocable Family Trust. The court's decision, delivered on June 23, 2026, affects how commercial condominiums are appraised for tax purposes, particularly in determining whether the income or cost approach should be used in property assessments.
This ruling is crucial for property owners and tax authorities in Montana, as it clarifies the standards for property appraisal and the information required to support those valuations. The case, docket number DA 25-0673, arose from a dispute over the Montana Department of Revenue’s (MDOR) property assessments for the 2023/24 tax cycle.
Background
In this case, Kenneth O’Brien, acting as the personal representative for the estate of Maxine O’Brien, and the Hash Family Trust, challenged the MDOR's adjusted appraisal of their property, a commercial condominium building known as Plaza West I (PWI) in Kalispell, Montana. The dispute began when O’Brien appealed the MDOR’s property assessment to the Flathead County Tax Appeal Board (CTAB), which ruled in favor of O’Brien. However, the MDOR subsequently appealed to the Montana Tax Appeal Board (MTAB), which reversed CTAB's decision. O’Brien then sought judicial review from the Montana Eleventh Judicial District Court, which affirmed MTAB’s ruling.
The core issue in the dispute was whether the MDOR had sufficient, relevant income information available to justify using the income approach for property valuation, as mandated by Montana law. If such information was available, the MDOR was required to use the income approach; if not, it could resort to the cost approach. The case involved multiple hearings and submissions of appraisal data, with O’Brien asserting that the MDOR had sufficient information to use the income approach.
The Ruling
The Montana Supreme Court, led by Justice Katherine M. Bidegaray, ruled on several key points raised by O’Brien. The court affirmed the District Court's conclusion that the MDOR could consider the validity and reliability of O’Brien’s appraisal. However, it reversed the District Court's decision regarding MTAB’s merits decisions and reinstated CTAB’s earlier rulings. The court stated, “We affirm the District Court’s July 15, 2025 order to the extent it concluded MTAB could consider the validity and reliability of O’Brien’s appraisal.”
Furthermore, the court emphasized that the MDOR's assessment must adhere to the statutory requirement of using the income approach if sufficient income data is provided. The court’s ruling reinstated CTAB’s decisions for the specific condominium units in question, Units 130, 132, and 136, effectively siding with O’Brien's valuation approach.
Impact
This ruling has significant implications for property owners and the MDOR in Montana. It clarifies the standards for appraising commercial condominiums and reinforces the importance of providing sufficient income information for property assessments. The decision may influence future property tax disputes, as it sets a precedent for how income data is evaluated and utilized in property valuations.
Property owners can expect that their provided income information will be taken into account more rigorously in future assessments, potentially leading to more favorable outcomes for taxpayers. Additionally, the ruling may prompt the MDOR to refine its appraisal methods and ensure that it adequately considers taxpayer-submitted data during property assessments.
What's Next
Following this ruling, it remains to be seen whether the MDOR will seek further appeal or adjust its appraisal practices in light of the court's decision. There may also be related cases pending that could further clarify the standards for property valuation in Montana.