Property Tax in Tennessee

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Property Tax in Tennessee

Over the years, the state of Tennessee has been grabbing the attention of several home seekers. Families, couples, retirees, and those who prefer to live in a peaceful environment with a relatively mild climate, surrounded by historical landmarks, are flocking over to Tennessee. The state of Tennessee is arguably regarded as one of the most affordable places to live in. Moreover, the Tennessee housing market continues to attract both motivated home buyers and property investors from other states. 

The population growth of Tennessee can also be attributed to the state’s tax rates as residents of this beautiful state are enjoying zero state income tax and lower property taxes. Compared to other places, the amount of the median annual property tax that Tennessee homeowners pay is roughly half of the national average. 

Whether you are planning to move to this dynamic place or are considering selling your Tennessee property, it is important that you are fully aware of how the property taxes process works. This article will give you a comprehensive look at the property tax landscape in the state of Tennessee. It will also tackle how property taxes affect property owners and sellers, what to expect if you are delinquent with your tax payments, fines and penalties you need to face, where property taxes are being used for, and valuable property tax tips on managing or lowering your taxes.

Property Taxes in Tennessee

Many home buyers are vying to secure a deal in Tennessee’s competitive housing market. One of the perks of living in the state of Tennessee is its notably affordable housing. The annual property taxes of the average Tennessee household are comparably lesser than that of the average American household. Having lower property taxes will certainly help families or new couples save more on housing expenses, so they can focus on other important aspects of their households.

In Tennessee, a county assessor is delegated by the local government to facilitate the handling of the property taxes. Assessors are dutifully monitored by the Division of Property Assessments, a sector under the Division of Comptroller of the Treasury. The assessor will appraise the property and determine its current market value. The appraised value will be valid for the next four to six years. After which, the property will go through a reappraisal. Assessors will either physically visit your property or appraise it remotely using tax rolls. 

As a home or property owner, if you believe that your property was given a higher or an incorrect appraised value, you have the option to discuss this with your county assessor or file an appeal with the county’s Board of Equalization. You can also contact the assessor’s office if you have other assessment inquiries, such as your assessment ratio, assessed property value, or should you need to change your mailing address. 

Compared to other states where the assessed value is the same as the current market value, in Tennessee, the assessed value of a residential property corresponds to 25% of the market value. For example, if the county assessor gave your property an appraisal value of $200,000, your assessed value will be $50,000. 

Aside from your property’s assessed value and assessment rate, tax assessors will also take into account any property abatements and tax exemptions when appraising the value of your home or property. To calculate your tax bill, your assessed value will be multiplied by your county’s tax rate. Tax rates in Tennessee are computed by the County Commission and are set per $100 of the assessed value. With the example above, if your assessed value is $50,000 and your tax rate is $3.00, your total annual taxes will be $1,500. 

It is vital to note that the property tax rate is not the same across the state. For instance, the county property tax rate of Davidson county is slightly lower than Shelby county. The city of Memphis, which is situated in Shelby county, has the highest property tax rate in the state, so if you are planning to settle in this vibrant city, you need to prepare yourself for the amount of property tax you have to pay. If you are eyeing to purchase a property in the city of Nashville, you might need to pay a lower property tax than that of Memphis city, but it will still be a higher amount compared to other cities. If you need further assistance, you can use a Tennessee property tax calculator to help you compute your expected property taxes. 

Photo credit: Image by Steve Buissinne from Pixabay 

Do Property Taxes Affect Homeowners Selling a House

Regardless if you are selling your residential property to companies that buy houses in Tennessee, listing it on the market, or offering it to cash home buyers in Knoxville or other cities, it is important that you are not only familiar with the cost of selling a house but also its corresponding tax regulations. Remember that since your real estate property is considered to be one of your capital assets, it might be subjected to capital gains tax if you plan to sell it. 

Thankfully, because of the Taxpayer Relief Act of 1997, the majority of homeowners selling their properties are exempted from paying property taxes. The tax-reduction act states that if you are single, up to $250,000 of the sale profit is considered tax-free, and the amount doubles for married couples who filed a joint return. If the sale profit surpasses these tax-free limits, the excess amount will be tagged as capital gains. Keep in mind that you will only be exempted if you have used the property as your primary residence for at least two of the five years before the sale date. Additionally, this tax privilege can only be used once every two years. 

What Do these Property Taxes Cover

It is perfectly natural for some taxpayers to feel burdened by the amount of taxes they need to pay every year. While it can be overwhelming, especially for first-time homeowners, you need to remember that property taxes are used to fund local projects and public services. Without this revenue, the local government won’t be able to address the needs and issues of the community. In the state of Tennessee, the funds are utilized for:

  • Municipal infrastructure
  • General government services
  • Protective services
  • Municipal employee pay
  • Resident services
  • Recreational services
  • Law enforcement and first responders

Do You Have to Pay Tennessee Property Taxes?

Whether your real estate property is residential or business, or is being utilized as a rental, you are legally obligated to pay the state’s property taxes. If you become delinquent with your tax payments, there is a possibility you may lose your property. Unpaid taxes will become a property lien, and in Tennessee, your house can be sold through a tax sale process to pay off delinquent taxes. 


Remember that as long as you own a property, property taxes are mandatory contributions you need to deal with. While it is impossible to free yourself from paying these taxes, there are certain ways you can consider doing to lower down your tax bill. Aside from making sure that you understand your property tax bill, you can also:

  • Explore state and local exemptions
  • File a tax appeal
  • Check similar properties within your area, and look for possible discrepancies
  • Request and analyze your property tax card
  • Limit any upgrades or changes to your property before an assessment, as these could increase your home value
  • Make sure that the assessor has access to your property
Fines for Not Paying Property Taxes in Tennessee

Fines for Not Paying Property Taxes in Tennessee

Before selling your home and as a responsible homeowner, it is important that you ensure that your property taxes are updated and fully paid for. Even if you are working closely with firms that promote “Buy my house in Nashville” or in other cities or counties, you still need to be fully aware of the corresponding fines and penalties for having delinquent property taxes. 

In case your property was sold as a tax sale, you still have the opportunity to redeem it. Several states provide homeowners the chance to settle the balances owed so that they can keep their property. Generally, the homeowner is given a limited time to pay the tax sale purchaser the amount they paid for in the sale, including interests, court costs, and other penalty charges. In Tennessee, the redemption period is usually one year.

However, there are certain instances wherein this interval may be shortened. For example, if the property is abandoned, you are only given 30 days to redeem it. Aside from the expenses previously mentioned that you need to pay, you might also need to settle certain charges with the buyer from the tax sale in order for you to redeem your property. 

Endnote 

Owning a home clearly has its merits. Alternatively, it also has its corresponding financial responsibilities that you need to regularly address. Paying your Tennessee property taxes religiously will not only satisfy your duties as a resident but will also help this dynamic state to continue to flourish and progress. 

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