Commercial Property

Definition of Commercial Property

Commercial property is defined as property used or owned by a business, a trade, or a corporation (public benefit, mutual benefit, or religious), or used for the production of income, and includes industrial property. The industrial property included within this definition is defined as all land used for industrial purposes, improvements, and buildings used to house the industrial process and all storage facilities. 15-1-101, MCA.

  • Office buildings
  • Restaurants
  • Shopping Centers
  • Apartments
  • Hotels and Motels
  • Industrial Parks
  • Warehouses
  • Factories
  • Light Manufacturing
  • Nursing Homes
  • Golf Courses
  • Mobile home & RV Parks

Income and Expense Reporting

Commercial property owners can report their income and expense information to assist in determining fair and equitable property values statewide.

Learn how to report your commercial property income and expenses

Commercial Property Valuation

When determining the market value of commercial property, as defined in 15-1-101, MCA, department appraisers will typically use the income approach or the cost approach.

The income approach is the preferred valuation method for commercial property when sufficient and relevant income and expense data is available for the department to develop income models. Buyer demand for a commercial property is dependent on its ability to generate and maintain an income stream. In the income approach, the anticipated future benefits (income or rent) of property ownership are converted into an estimated present worth (current market value) by applying a capitalization rate to net income.

The department will use the cost approach when income and expense data is not available. The cost approach is also used to value unique properties or when an income model does not exist for a property’s use type. The cost approach is considered the appropriate approach to value when the department determines a property’s land value is the predominate factor of its overall land and building value.

The department generally does not develop sales comparison market models for commercial property due to the lack of similar sales data.

The final valuation method chosen will be the method which most accurately represents 100 percent of market value, as defined in 15-8-111, MCA.

For more information on the department's commercial property valuation process, refer to the Montana Residential, Commercial, and Industrial Property Classification and Valuation Manual.