Count property tax billed in another household member's name as rent in Montana's elderly homeowner/renter credit (ARM 42.4.302(2)(b))

[MaxGhenis]

Summary

An elderly Montanan who lives in a home billed to another household member, such as an adult child who files separately, got $0 from the elderly homeowner/renter credit. Montana lets that claimant count the property tax as rent:

• ARM 42.4.302(2) ("IMP: 15-30-2340, 15-30-2341"): "To calculate the credit, an eligible claimant may use property taxes billed: ... (b) as rent if the property occupied by the claimant is in a name other than the claimant."
• Before the rule's 2017 restructuring, the same text was ARM 42.4.302(5), in force from 8/20/2004: "Property taxes billed are allowable as rent if the property occupied by an eligible claimant is in a name other than the claimant." See the 2008 and 2010 captures of mtrules.org.
• The Form 2 instructions for Schedule 2EC line 23 (2025, PDF p. 47): "If the property occupied by you is in a name other than your own, the property taxes billed for that property can qualify as rent only."

The model counted only each tax unit's own real_estate_taxes and rent, so that claimant's lines 23 and 24 were both 0.

Stacked on #9900, which carries #9882 and #9877. #9900 is at da7c17e844, with main merged in. This PR targets main because the PR workflow runs only for PRs into main, so its diff includes #9900's commits until #9900 merges. This PR's own changes are the two commits after da7c17e844 (compare). Merge #9900 first, then merge main into this branch.

The homestead reading (decision d1035) is not implemented

d1035 is still open. It asks whether the household's one claimant counts the homestead's whole property tax and rent (MCA 15-30-2337(5), (10)) or only their own (the form's "you"). This PR keeps the form reading, which is the decision's default.

The rule here is needed under either ruling. §2340(1) and (2) cover a claimant who owns or rents the homestead; a claimant who does neither needs ARM 42.4.302(2)(b) to count the bill at all.

d1035 would still change two things here:

• A claimant who co-owns the home with someone in another tax unit counts only their own bill on line 23 today. Under the homestead reading they would count the whole bill.
• That would remove the intended exception described under the invariants below.

How "as rent" enters Schedule 2EC

Line	Before	After
23 Property tax billed	real_estate_taxes of everyone in the tax unit	the same when the head or spouse is billed anything; otherwise 0
24 Rent paid	rent of the tax unit	the same, or, when line 23 is 0, the larger of that and the household's real_estate_taxes
25	line 24 × 15%	unchanged

Choices, with reasons:

1. The bill goes on line 24 and is multiplied by 15% on line 25. The instructions put the sentence under line 23 and say the bill "can qualify as rent only", so it may not go on line 23. The rule called it "allowable as rent". Line 24 is rent, line 25 is "Multiply line 24 by 15%", and the 15% is §2337(11)'s rent-equivalent tax.

2. Line 24 is the larger of the rent paid and the bill, not their sum. The claimant "may use" the bill: a choice between two measures of what it costs to occupy one home. Adding them would count that home twice. The rule's facility provisions take the same approach to two housing costs for one period, allowing "either ... or ..., but not both" ((3)(a), and again in (3)(c)(v)). Max asked me to decide how the bill enters lines 24 and 25.

   One alternative is also defensible: use the bill only when the claimant pays no rent. §2337(5) defines gross rent as rent "actually paid ... pursuant to an arm's-length transaction". The two readings differ only for a claimant who pays a household member less rent than that member's bill. I recorded the alternative on d1035.

3. The claimant is the head and spouse. A joint return is one claim, and line 23 is "the property tax you were billed". If either is billed, the home is in the claimant's name and the rule does not apply: the tax unit's bills stay on line 23, a dependent co-owner's included, exactly as before. If neither is, the home is wholly in others' names, a dependent's included, and the bill moves to line 24.

4. The bill is the household's whole property tax. The instructions refer to "the property taxes billed for that property", so if two other members co-own the home, both bills count. PolicyEngine's household is one dwelling. Owners outside the household, such as a landlord, are not visible to the model.

5. Every modeled year. The rule has been in force since at least 8/20/2004, as (5) and then (2)(b), so it applies to every year the model covers, from 2009, and needs no parameter.

   The instructions caught up later. The 2009 and 2010 booklets mention only trusts ("Property tax that is billed to an irrevocable or family trust qualifies as rent only"). The general sentence appears from 2011.

A tension the PR does not resolve. §2338(1)(c) makes eligible a person who occupied a dwelling "as an owner, renter, or lessee", and the 2025 Schedule 2EC has the same checkbox. A rent-free occupant fits that only through the rule's treatment of the bill as rent. Max's request named this case, the elderly parent in an adult child's home, as the gap to close, and the department's instructions apply the rule. So the PR models it.

Example: 2024, a parent living in an adult child's home

The parent is 80, has a $14,000 pension and pays no rent. The child is 45, has $6,000 of interest and is billed $4,000 of property tax. Each files their own return.

2024 Schedule 2EC line	Parent, before	Parent, after
18 Gross household income	20,000	20,000
20 = 18 − 12,600	7,400	7,400
22 Net household income (× 0.035)	259	259
23 Property tax billed	0	0
24 Rent	0	4,000
25 = 24 × 15%	0	600
27 = 23 + 25 − 22	0	341
30 Credit (× 100%)	0	341

The child is under 62 and cannot claim.

• If the parent paid the child $2,400 of rent, line 24 would still be 4,000. Counting the rent alone would give 101.
• If the parent paid $6,000, line 24 would be 6,000 and the credit 641, not 4,000 + 6,000.

Changes

• New mt_elderly_homeowner_or_renter_credit_property_tax_billed (TaxUnit, line 23).
• New mt_elderly_homeowner_or_renter_credit_gross_rent (TaxUnit, line 24).
  • It sums the household's bill as tax_unit.sum(add(person.household, period, ["real_estate_taxes"]) * head).
  • It is vectorized, with no Python branching on arrays.
• mt_elderly_homeowner_or_renter_credit_pre_one_claimant reads the two variables; the rest of its computation is Limit the Montana elderly homeowner/renter credit to one claimant per household (MCA 15-30-2341(1)) #9900's.
• mt_elderly_homeowner_or_renter_credit_selected_claimant is unchanged apart from its comment. One claim per household is still paid: a claimant whose bill counts as rent competes with the household's other eligible tax units by credit.

Tests

• New mt_elderly_homeowner_or_renter_credit_gross_rent.yaml, 12 cases:

  • rent only;
  • a parent in a child's home;
  • a claimant billed their own tax;
  • rent below the bill;
  • rent above the bill;
  • a home in a dependent's name;
  • two co-owners;
  • a joint couple billed through the spouse;
  • 2009;
  • outside Montana;
  • a joint couple billed nothing (the bill counts once);
  • a home co-owned with a dependent.

• New mt_elderly_homeowner_or_renter_credit_property_tax_billed.yaml, 6 cases.

• mt_elderly_homeowner_or_renter_credit.yaml, 6 new end-to-end cases with Schedule 2EC line-by-line comments:

  • the example above;
  • rent below the bill;
  • rent above the bill;
  • two elderly siblings where one owns: one claim of 1,150, [0, 1_150];
  • a home in a dependent's name: 600, against 1,150 before;
  • a home co-owned with a dependent: 1,150, as before.

• mt_elderly_homeowner_or_renter_credit_pre_one_claimant.yaml, 2 new cases.

• test_mt_elderly_credit_one_claimant.py:

  • Its Schedule 2EC reference now applies the rule, and 2 pinned Hypothesis examples were added.
  • A worked example.
  • A new Hypothesis test of monotonicity (invariants 6 and 7 below).
  • A pinned test of the one intended exception.

  These add about 4 s of test time to that file. Local run on macOS at load ~35: 38.9 s wall and 1.47 GB peak RSS for the whole file, including the model import. This is not a Linux CI measurement. No new test file was added.

Run locally against 3d487c5d4a, one file at a time:

• All 11 elderly-credit YAML files pass. In the folder's file order the counts are 34, 6, 3, 4, 14, 12, 3, 3, 6, 6 and 9: the credit file, then dependent deductions, eligibility, federal refundable credits, gross household income, gross rent, net household income, the pre-limit credit, property tax billed, rebate received and selected claimant.
• test_mt_elderly_credit_one_claimant.py (5 tests) and test_mt_elderly_credit_household_members.py (3 tests) pass, with Hypothesis installed.
• These code-health tests pass: test_reference_urls, test_known_dead_reference_urls, test_no_concatenated_reference_urls, test_no_builtin_sum_over_entity_calls and test_no_in_place_writes_to_cached_arrays.

Verification by separate agents, against the first version:

• Arithmetic. A Schedule 2EC calculator written from the parameter YAML reproduced every new expected value.
• Mutation testing. All 7 planned mutants were killed. They covered: rent only, sum instead of max, the whole tax unit on line 23, no in-another-name condition, the parameter ignored, no 15%, and no head weighting.
• Extra mutant. A head-or-spouse double count was caught only by a Hypothesis example. YAML case 11 now kills it deterministically.
• Legal review. It found that the rule predates 2011, which removed the parameter, and that a dependent co-owner's bill had stopped counting, now restored on line 23. Both are fixed in 3d487c5d4a. It also flagged the tension and the alternative reading above, and the co-owner point under d1035.

Invariants

These hold for every Montana household. The first five are #9900's and still hold; the Hypothesis test checks all seven.

1. Each tax unit's credit before the limit equals a reference written from the Schedule 2EC lines, including this rule.
2. The household's credit is the largest of its tax units' credits, and never exceeds the $1,150 cap.
3. At most one tax unit per household is paid.
4. Each tax unit is paid nothing or its whole credit.
5. The household's credit does not depend on the order of its tax units.
6. Raising the property tax billed to one tax unit never lowers another tax unit's credit before the limit. It never lowers its own credit either, if it was already billed property tax.
7. Under the same condition, the household's credit never falls.

Intended exception to 6. A tax unit billed nothing that becomes billed a small amount can lose credit. It stops counting the household's bill as rent and counts only its own bill on line 23. In the example, billing the parent $100 drops their credit from 341 to 0.

This follows from the form reading of line 23 for a co-owner in another tax unit. It is pinned by test_newly_billed_tax_unit_can_lose_credit. Under d1035's homestead reading a co-owner would count the whole bill, and the drop would go away.

Microsim impact

Pending: a 2024 base and branch pair, through the hub runner lockrun.sh. The base is #9900's head da7c17e844; the branch is this PR's head.

Not changed

• Decision d1035, described above.
• Owners outside the household. The model sees property tax only for household members. A claimant who lives rent-free in a home owned by someone outside the household is not modeled.
• Primary residence and one acre. real_estate_taxes is not limited to the residence and one acre. This was already true of line 23; the rule now passes it to line 24 as well.
• An elderly dependent as claimant. Eligibility still checks only the tax unit head and spouse (predates Limit the Montana elderly homeowner/renter credit to one claimant per household (MCA 15-30-2341(1)) #9900).

axiom: TheAxiomFoundation/rulespec-us#1512 queued (ARM 42.4.302(2)(b) evidence, review_finding addendum and companion cases in this comment; signed-encoder runs need approval and ARM 42.4.302 and the Montana forms are not in the pinned corpus)

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