Big Sky has no city government, no short-term rental permit cap, and no county ordinance limiting how many nights a condo can be booked. Buyers hear that and assume the runway is clear. It isn't. A July 2025 Montana Supreme Court ruling confirmed that the document actually controlling whether a Mountain Village unit can be rented by the night isn't anything the county keeps on file. It's the recorded declaration for that specific building, and that declaration can shut down a rental even after the county has already said yes.
What Gallatin County Actually Regulates
Start with what's true, because it explains why buyers get comfortable. Big Sky sits inside Gallatin and Madison Counties rather than inside its own municipal boundary, so there's no city hall setting short-term rental policy. The only local rule that even addresses the topic is the Gallatin Canyon/Big Sky Zoning Regulation, and as of 2026 it imposes no cap on the number of rental permits, no minimum night stay, and no occupancy limit. What operators do need is a Montana Public Accommodation License through the state Department of Public Health and Human Services, administered locally by the Gallatin City-County Health Department, and that license is not transferable. A buyer inherits the condo, not the paperwork, and has to reapply from scratch after closing.
Taxes stack on top regardless of who holds the license. A booking in Big Sky carries a 12 percent combined lodging tax: 8 percent to the state split between the Lodging Facility Use Tax and Lodging Sales Tax, plus a 4 percent local resort tax collected by the Big Sky Resort Area District. Airbnb and VRBO remit both automatically for stays of 30 days or fewer, but the district still audits compliance directly, and its enforcement procedure was updated in February 2025 with escalating late fees that start at $30 after five days and climb to $150 plus 12 percent annual interest.
The one place in Big Sky where rentals are flatly prohibited isn't zoning either. MeadowView, a Big Sky Community Housing Trust development built for owner-occupancy, bans short-term rentals outright through its own deed restriction. That's the pattern worth noticing before the Whitefish case even enters the picture. Every real constraint on renting a Big Sky property so far has come from a private instrument, not a government one.
The Whitefish Case That Rewrote the Rules for Every Covenant in the State
In 2020, R&R Mountain Escapes bought a home in a rural subdivision outside Whitefish and began renting it short-term through a local vacation rental company, advertising on Airbnb and VRBO for up to ten guests a night. The subdivision's covenants, recorded back in 1990, restricted the property to "country residential living" and prohibited commercial use. Neighbors sued. Flathead County District Court sided with them in November 2023 and enjoined the short-term rentals, and notably, the court also threw out the county's own 30-day zoning inference, ruling that where covenants govern, the zoning code doesn't get a vote.
R&R appealed, and the Montana Supreme Court affirmed the injunction on July 22, 2025. The ruling mattered because five years earlier, in Craig Tracts v. Brown Drake, Montana's high court had found a bare "residential purpose" covenant ambiguous, which meant it favored the property owner's free use of the land. Brandt didn't overturn that precedent. It clarified that when several covenant provisions point the same direction, no commercial use, a nuisance clause, a single-family restriction, they can add up to something unambiguous even if any single clause read alone would not be. Chief Justice Cory Swanson's concurrence put the underlying logic plainly: a covenant owner "obtains an expectation the covenant will be enforced." The court described the R&R rental as "more akin to an apartment" than a residence, and the county permit R&R had already obtained didn't factor into the outcome at all.
What That Means Standing in a Mountain Village Unit
Every condo building in Mountain Village, from the Hill Condos to the resort's larger developments, sits inside its own recorded declaration, written by a different developer in a different decade, with its own language on commercial use, occupancy, and nuisance. Before Brandt, a buyer could reasonably assume that an ambiguous "residential use only" clause would be read in their favor, the way Craig Tracts read one in 2020. After Brandt, an association, or a single neighboring owner, can win that argument by stitching several provisions together, even without a sentence that says "no short-term rentals" outright.
That shifts what due diligence actually requires. Searching a declaration for the phrase "short-term rental" and moving on is no longer enough. The document has to be read as a whole, the way the Supreme Court read the Whitefish covenants, because a combination of otherwise ordinary clauses can now do the work of an explicit ban. That reading has to happen inside the due diligence period, before the contingency expires, not after closing when the folder gets filed away.
The Hill Condos are a useful real-world example of how layered this gets, independent of covenant language entirely. Reporting from Explore Big Sky documented the building housing a mix of owner-occupants and long- and short-term tenants, and one owner facing an $18,726 special assessment for a siding project on top of rising HOA fees and property taxes. A covenant that permits rental doesn't protect an owner from a bill like that. It just means the rental income is legally available to help absorb it, which makes reading the reserve fund and assessment history just as important as reading the rental clause.
The Tax Bill Changed Underneath the Same Purchase
Montana's 2026 property tax overhaul adds a second document to the pre-closing checklist. The Department of Revenue now applies a flat 1.90 percent rate to any property classified as a second home or short-term rental, while a primary residence or a qualifying long-term rental, defined as leases of 28 days or more with the tenant living there as their primary residence for at least seven months a year, gets tiered rates starting at 0.76 percent.
Run that against an $850,000 Mountain Village condo. Taxed under the tiered structure, the bill lands somewhere near $7,300 a year. Taxed at the flat 1.90 percent rate that applies to second homes and short-term rentals, it lands closer to $16,150, a gap of roughly $8,800 a year that has nothing to do with the unit's covenant and everything to do with how it's classified with the county. The window to enroll for the 2027 tax year opened May 4, 2026 and runs through March 1, 2027, which means the classification a buyer requests this fall is the one that determines next year's bill, and that status doesn't carry over automatically when ownership changes.
That number then sits next to the operational choice a buyer is actually weighing. Big Sky Resort's own property management program takes a 50/50 split of nightly rental revenue with no monthly fee, which is a different arithmetic than placing the same unit with an independent local manager, and different again from qualifying it as a long-term lease to chase the lower tax tier instead of nightly income. Three financial products, one condo, and the tax classification decides which one actually pencils.
Reading a Mountain Village Listing Now
The comparable sales sheet used to be the whole story. It isn't anymore. Two documents now sit alongside it: the recorded declaration for that specific building, read in full rather than searched for a keyword, and the property's current classification with the Department of Revenue, which doesn't transfer automatically at sale and has its own filing deadline every March 1st.
FAQ
Does an existing county rental permit protect a new owner after closing? No. In Brandt, R&R Mountain Escapes had already obtained a county permit, and the Montana Supreme Court still upheld the covenant-based ban. The permit didn't factor into the outcome.
Is there a cap on how many short-term rentals can operate in Big Sky? No county-level cap exists as of 2026. Whatever limit applies to a given property comes from that building's own recorded declaration, not from a citywide or countywide ceiling.
Does a unit with a long-term tenant in place automatically get the lower tax rate? No. The reduced tiered rate has to be enrolled through the Department of Revenue and requalified whenever ownership or use changes, and missing the March 1 deadline means paying the flat 1.90 percent rate for that tax year regardless of how the property is actually being used.
Buying a Mountain Village condo with rental income in mind now means reading two documents most buyers used to skip. If you want a second set of eyes on a building's declaration and what its current tax classification means for your numbers before you write an offer, Sandy Revisky De Leon has spent nearly three decades working through exactly this kind of paperwork in Big Sky.
