Montgomery apartment property taxes are calculated on 20% of a building’s appraised market value, because Alabama puts rental property in Class II, and that assessed value is then multiplied by the combined millage, which inside the City of Montgomery totals 48.5 mills under the state’s October 2024 schedule. In practice, that works out to a tax bill of a little under 1% of market value per year for a typical apartment building inside city limits, before any adjustments from the state’s new 7% cap on yearly increases.
The rest of this guide walks through each step: how the Montgomery County Revenue Commissioner’s office values apartments, which levies make up the 48.5 mills, how the cap works and when it falls away, what owners must file each year, and how to appeal a value they disagree with.
Why Montgomery apartment property taxes start in Class II
Alabama sorts taxable property into four classes, and the class sets the share of market value that is actually taxed. According to the Alabama Department of Revenue’s property tax overview, Class III, assessed at 10%, covers agricultural and forest land and “single-family, owner-occupied residential property.” Class II, assessed at 20%, is the catch-all: “All property not otherwise classified.”
An apartment building is not owner-occupied single-family housing, so it falls into Class II. That is true for a 6-unit walk-up in Cloverdale and a 200-unit garden complex off the Eastern Boulevard alike. The department’s guidance on the new assessment cap gives the clearest example of how the line is drawn: when a homeowner moves out and rents the house, “the parcel will be changing from Class III to Class II.” In other words, the moment a property is rented, it is taxed at double the assessment ratio of an owner-occupied home.
Two other consequences follow from Class II status:
- The homestead exemption does not apply. It is reserved for an owner’s principal residence.
- Current-use valuation does not apply. That lower valuation method is limited to qualifying Class III farm and timber land, so apartments are appraised at fair market value.
The 48.5 mills inside the City of Montgomery
A mill is one-tenth of one cent, or $1 of tax for every $1,000 of assessed value. The department’s county-by-county millage schedule for October 2024 lists the levies that apply to property inside the City of Montgomery:
- State: 6.5 mills (3 for schools, 2.5 for the general fund and 1 listed on the county schedule as the soldier mill)
- Montgomery County: 7.5 mills
- Schools: 22.0 mills (3.5 countywide plus 18.5 for the Montgomery school district)
- City of Montgomery: 12.5 mills
Added together, those come to 48.5 mills. The schedule lists each levy separately rather than printing a single total, so it is worth adding them yourself for any parcel, especially near the city’s edges. The county’s 5-mill fire levy, for example, applies outside the City of Montgomery and Pike Road, not inside them.
The school portion is the reason Montgomery’s rate is higher than it was a few years ago. On the October 2020 schedule, the district-level school levy was 10 mills and the in-city total was 36.5. In November 2020, voters approved a 12-mill increase for Montgomery public schools, which lifted the district levy to its current level. Anyone comparing a seller’s older tax bills with today’s should keep that step-up in mind.
From market value to a tax bill: a worked example
The arithmetic is simple once value and millage are known. Take a hypothetical apartment building appraised at $1,000,000:
- Market value: $1,000,000
- Assessed value at 20% (Class II): $200,000
- Tax at 48.5 mills ($200,000 × 0.0485): $9,700 per year
That bill equals about 0.97% of market value. A building appraised at $2.5 million would carry roughly $24,250 a year under the same rate. These figures are illustrations of the formula, not quotes for a real property, and the actual bill depends on the parcel’s appraised value and the levies that apply to its exact location.
The Alabama Constitution also sets an outer limit. Amendment 373 provides that the total tax on any item of Class II property “shall never exceed 1 1/2 percent” of its market value in a year, with exceptions for Mountain Brook, Vestavia Hills and Huntsville. At 48.5 mills on a 20% ratio, Montgomery sits well below that ceiling, which means the practical question for owners is almost always the appraised value, not the rate.
How the county appraises Montgomery apartment buildings
In Montgomery County, valuation is handled by the Appraisal Department, which is part of the Revenue Commissioner’s office. The Montgomery County Appraisal Department mails valuation notices each spring; the 2026 notices were scheduled to go out on or about April 15, 2026.
Annual reappraisal on a four-year review cycle
Every Alabama county now operates under annual reappraisal, and the Department of Revenue describes a review of all property in a county being completed over a four-year equalization cycle. Values can move every year, but appraisers physically review a given parcel on a rotating basis rather than inspecting every building annually.
The October 1 lien date
Value is set as of October 1. Montgomery County’s appeals guidance, written for the 2024 tax year, gives October 1, 2023 as the lien date and uses comparable sales from October 1, 2022 through September 30, 2023. The practical point is that the value on a notice reflects market evidence from a window that has already closed, so a sharp change in the local market after that window will not show up until a later cycle.
The income approach for apartments
Apartments are income-producing property, and Alabama’s appraisal guidance relies on the income approach for them. The Department of Revenue’s 2025 directive on rent-restricted apartments lays out the familiar steps: start with potential gross income, subtract vacancy and collection loss, subtract operating expenses to reach net operating income, and divide by a capitalization rate that is “loaded” with the local effective tax rate. For rent-restricted (tax-credit) properties, that directive lists an 8.50% rate for Montgomery County. It is a figure for that specific category of housing, not a published rate for every market-rate building, but it shows the method the state expects assessors to follow.
The loaded cap rate is worth understanding. Because property tax is itself an operating expense, appraisers who value a building by its income usually exclude the tax from expenses and add the effective tax rate to the cap rate instead. That avoids a circular calculation in which the tax depends on value and value depends on the tax.
What owners must report by December 31
Alabama law requires owners to tell the Revenue Commissioner about new structures, additions, remodeling and renovations completed by October 1, and the department says the owner must visit the office no later than December 31. Routine work such as re-roofing, minor repairs and painting does not need to be reported. A full interior renovation of a Montgomery apartment property is the kind of change that does.
The 7% cap and when it falls away
The biggest recent change to Alabama property taxes is Act 2024-344, known as HB73. According to the Department of Revenue’s page on the 7% assessment cap, the law caps “annual increases in taxable assessed value for Class II and Class III real properties at 7 percent.” The base year is October 1, 2024, for tax collections beginning October 1, 2025, and as written, the cap runs through the fiscal year beginning October 1, 2027. Owners do not need to apply.
The cap does not freeze the bill forever. The department lists events that end the cap and reset taxable value to full market value:
- A change of ownership
- A change in the property’s class
- New improvements or significant improvements (ordinary maintenance does not count)
- Inclusion in a tax increment district
For apartment owners, the ownership rule matters most. A long-held building whose taxable value has been limited by the cap will be reassessed at full value after a sale, so the buyer’s tax bill may be noticeably higher than the seller’s. Because the cap limits taxable value rather than the millage, a reset can also land at the same time a major renovation is reported.
Personal property: the return many apartment owners miss
Real estate is only part of the bill. Furniture, appliances and other equipment in rental units are business personal property. Montgomery County’s business personal property page specifically lists “appliances in apartments and/or rental property” and confirms these items are assessed at 20% of market value, the same Class II ratio as the building.
Key rules for the annual personal property return:
- The return lists items owned on October 1 and must be received by December 31 each year.
- Each item is reported with its acquisition date and cost.
- Items expensed for federal income tax purposes still have to be reported, under Alabama Administrative Code rule 810-4-1-.12.
- The tax is billed a year later: according to the Department of Revenue, property reported as of one October 1 is billed and payable the following October 1.
For an older Montgomery complex with refrigerators, ranges, dishwashers, washers and dryers in every unit, plus maintenance equipment and leasing-office furniture, the return can add a meaningful line to the tax budget. It is also a document a buyer’s due diligence team will want to see.
Due dates, delinquency and tax sales
Alabama property taxes are due October 1 and become delinquent after December 31, according to the Department of Revenue. Payment is made to the Montgomery County Revenue Commissioner, whose office handles mapping, appraisal, assessment and collection for the county.
Unpaid taxes can lead to a tax sale conducted through the Revenue Commissioner’s office. Under state law, an owner can generally redeem delinquent property within three years of the sale by paying the amount owed plus interest at 12% a year. For an apartment owner, a delinquency is also a red flag in any sale process, since title will have to be cleared before closing.
Challenging a value in Montgomery County
Owners who disagree with an appraisal have a defined but short window. The Montgomery County appeal FAQs say an appeal must be filed within 30 days from the date printed on the valuation notice and that all supporting documents must be submitted with the appeal when it is filed. Appeals go to the County Board of Equalization.
If the Board’s decision is still unacceptable, state law allows an appeal to circuit court within 30 days of that decision. The owner must also file a cost bond in that period and either pay the taxes before they become delinquent or post a supersedeas bond.
For apartment buildings, the strongest appeals usually rest on income evidence rather than opinion. Useful documents include:
- A current rent roll showing in-place rents and vacant units
- Trailing 12-month operating statements, with property tax shown separately
- Recent capital needs, such as roof or HVAC replacement, supported by bids
- Sales of genuinely comparable Montgomery apartment buildings within the county’s sales window
Because the appraiser is working from a capitalized income figure, an accurate picture of vacancy, collection loss and actual expenses often does more than any argument about the building’s age.
What this means for Montgomery owners
A few practical conclusions follow from how the system works:
- Budget at the right ratio. Rental property is taxed at 20% of value, not 10%. Owners who converted a house or a small building from owner-occupied use should expect the higher class.
- Track the cap’s reset events. The 7% limit protects a long-term owner from sharp jumps, but a sale, a class change or a significant improvement removes it. Buyers should underwrite taxes on full market value, not the seller’s bill.
- Keep the December 31 deadlines on the calendar. Both the improvement report and the personal property return are due by then.
- Watch the spring notice. With only 30 days to file, an appeal needs a ready rent roll and expense history.
- Use the right millage. Inside the city, the October 2024 schedule adds up to 48.5 mills. Parcels outside city limits carry a different mix, including the county fire levy.
Population trends matter for valuation too. The Census Bureau’s QuickFacts profile for Montgomery shows a 2020 count of 200,603 and a July 1, 2025 estimate of 195,300, with an owner-occupied rate of 54.4% and a median gross rent of $1,089 for 2020 to 2024. In a city where roughly 45% of households rent and the population has edged down, income evidence from actual operations is usually the most reliable way to support a fair assessment.
Taxes also shape the timing and pricing of a sale. Because Alabama bills in arrears, the closing statement will usually prorate a tax year that has not yet been billed, and both sides need to agree on whose estimate to use. A buyer underwriting on the 7% cap reset will also want a clear picture of the building’s full market value, which can affect price negotiations.
Owners comparing Alabama with other states can see how its classification system stacks up in our state-by-state guide to rent control and property tax. For more on statewide conditions, see our Alabama multifamily market overview. And if you are weighing a sale and want to understand how a local buyer looks at these numbers, our page on selling an apartment building in Montgomery explains how we approach properties in the city.
Quick reference: Montgomery apartment tax calendar
- October 1: Lien date for valuation; taxes on the prior assessment become due; personal property owned on this date is reported for the coming year.
- December 31: Deadline to report improvements, to file the business personal property return and to pay taxes before they become delinquent.
- Spring (about April 15 in 2026): Valuation notices mailed by the Appraisal Department.
- 30 days after the notice date: Deadline to appeal to the Board of Equalization, with supporting documents attached.
- Through the tax year beginning October 1, 2027: The 7% cap on increases in taxable assessed value remains in effect unless a reset event occurs.
