Tennessee Property Tax Laws

Taxes are necessary for any state, and while no one appreciates paying them, they help support vital public services such as fire departments, public schools, highways, and other organizations that Tennessee citizens rely on every day.

The amount of property tax you pay each month will affect not just how much you pay for your mortgage, but also the total price people are willing to pay for your house if you decide to sell. Property tax is an inextricably linked part of property ownership. The percentage at which you are taxed for your property may vary depending on where you reside, and this rate will normally grow at least slightly each year.

Learn about these Tennessee property tax laws before selling your house and know more about tax relief and tax programs.

property tax laws in Tennessee

Property Tax Laws in Tennessee

Property taxation is authorized by the Tennessee Constitution and common law. Despite the fact that the legislation mentions a state property tax, no state tax has been applied since 1949. Most privately-owned real estate, physical property other than household items, personal effects, and foreign property are subject to the Tennessee property tax.

The Tennessee property tax also applies to some intangible assets owned by insurance, lending, investment, and cemetery firms. The State Board of Equalization, which has power over the appraisal, valuation, classification, and assessment of all property in the state, administers the tax. The property tax year in Tennessee is a calendar year.

Every year, the average American household spends $2,127 in property taxes on their home. The ordinary Tennessee household will very likely pay less property tax in TN 2022.

Individuals and businesses who own property in Tennessee must pay a Tennessee property tax. Even if the property was passed down to you through an estate or you own a rental property, you must still pay Tennessee property taxes.

Public utility property is assessed at 55% of its fair market value, industrial and commercial property are assessed at 40% of their value, and residential and farm property are assessed at 25% of their value. These classifications show that in order to determine the amount of tax that the owner of real estate must pay, it must first be classified.

Nashville, TN Tax Laws

Residential property taxes are calculated using the assessed value, which is 25% of the appraised value, and commercial property taxes are calculated using the assessed value, which is 40% of the total evaluated value. Property tax collection accounts for more than half of the Metropolitan Government’s operational budget.

The mayor of Nashville authorized a 34% increase in the city’s property tax levy. This rise impacts every aspect of the city, but it may also have benefits in terms of the quantity of capital generated for the city.

Nashville and the remainder of Davidson County are divided into two divisions. Each of these sections has its own rate of property taxation. Nashville and its neighboring areas are included in the Urban Services District. The previous tax rate of $3.155 per $100 of assessed value has been increased to $4.221. Knoxville, East Nashville, Downtown, and other neighborhoods are included in the Urban Services District.

Tennessee law prohibits counties and cities from simply increasing their overall tax receipts as property values rise due to periodic reassessment. After all, properties have been appraised, and a “certified” tax rate for each city and county will be decided. The certified rate is the rate that, when applied to the reappraised total value of all property (excluding new construction), generates the same amount of taxable income as in the current year. The Council must then affirmatively decide to impose a higher percentage than the certified rate if it wishes to earn additional income to achieve its revised budget.

This implies that the Metro Council will cut the tax rate in a year when the overall value of all property in the county has grown considerably due to reappraisals of older properties and the added value of new development. It also means that when property values are rapidly rising, as they are in some parts of Nashville, your tax bill could go down or up contingent on the tax rate if your home is in a part of the county where property values have not risen as rapidly as similar properties in other parts of the county.

Tennessee Property Tax Relief

The state law of Tennessee allows low-income seniors and disabled homeowners, in addition to handicapped veteran homeowners and their surviving spouses, to get property tax relief. This is a government program supported by General Assembly funding. Tax collectors, such as county trustees, accept submissions from potentially eligible taxpayers. The Tax Relief department reviews these submissions and determines program eligibility. Every year, nearly 100,000 people benefit from this $41 million-plus initiative.

  • The application deadline is 35 days from the bill’s due date, and all levies must be cleared by this time to be reimbursed.
  • You must file an application to your county’s trustee after receiving your tax bill to be eligible for the program. If your property is located inside city borders, you may also apply to your city collecting official.
  • Even if you qualify for assistance, you must pay all property taxes stated on your tax bill each year in order to get a refund.

Tennessee Property Tax Programs

Property tax programs in Tennessee include: 

1. Property Tax Freeze
Tennessee voters adopted an amendment to Article II, Section 28 of the Tennessee Constitution in November 2006, allowing the General Assembly’s law power to permit counties and/or municipalities to establish a local option property tax freeze for taxpayers 65 and older.

Homeowners who qualify for the program will have their primary residence’s property taxes frozen at a base tax amount, which is the portion of taxes owed in the year they initially qualify for the program. Following that, as long as the owner is eligible for the program, the sum of property taxes payable for that property will normally remain constant, even if there is a property tax rate hike or a county-wide reassessment.

2. Property Tax Relief

Property tax relief is a payment granted by the state of Tennessee to homeowners who meet the program’s eligibility requirements. Through the TN property tax exemptions and property tax relief programs, Tennessee law provides property tax relief to low-income elderly homeowners, handicapped persons, disabled veterans, and their surviving spouses.  Applications are available through your county trustee’s office and the city collecting official’s office.

3. Personal Property

According to Tennessee Code Annotated (TCA) 67-5-903, Tangible Personal Property is filed by “(a) All for-profit corporations, partnerships, other trade organizations that do not issue shares, and people as a profession or trade, except for producers whose real property is totally assessable by the Comptroller of the Treasury.” TCA 67-5-903 shows the 10 categories, as well as the nonstandard and leasing components of the schedule of tangible personal property, and their depreciation.

In the year the property was obtained, the owner of the property must report the whole purchase price for every component. According to the SBOE (State Board of Equalization) Rule 0600-05-.01, the overall acquisition cost has been computed as the total cost of new personal property, including installation, freight, sales tax, and set-up (15).

Who Is Responsible for Setting Taxes?

Local property tax rates are set by the county commission and city councils. County trustees and city collecting authorities are in charge of collecting property taxes. County property assessors appraise real estate for evaluation purposes and collect taxes on tangible personal property utilized or kept for commercial use. 

Property taxes are collected by local government officials. The Property Assessment web page of the Tennessee Comptroller of the Treasury provides an assessment calendar that includes deadlines for submitting and paying property taxes.

If a taxpayer chooses to contest his property’s assessment, he must first appeal to the County Board of Equalization and then to the State Board of Equalization.

The State Board of Equalization develops policies and processes for local property assessors and considers property appeals that go above the county level. The Division of Property Assessments, a division of the Comptroller of the Treasury, supervises assessors’ work to ensure correct protocols are followed; offers technical support during re-appraisal programs, and provides county assessors with manuals and instructional programs.

know your tax rights

What Are Your Tax Rights?

You have specific rights as a taxpayer that are guaranteed by state law. As a Tennessee taxpayer, you have the right to: 

1. Obtain tax filings and information written in clear language

2. Request public records

3. Get prompt responses to all requests and questions for tax assistance

4. Obtain just and respectful treatment from all Department of Revenue employees

5. Receive tax notifications with an overview of the amount billed

6. Rest easy knowing that the department will treat the financial information you provide it with confidentiality

7. Obtain a clear set of rules and processes for resolving tax issues arising from the interpretation and implementation of Tennessee’s tax statutes

8. Understand the Department’s policy on the use and preservation of personally identifiable information

9. Make suggestions for how the department can better serve you

10. File a prompt petition for an informal conference to contest any suggested evaluation

11. Understand that workers in the Department are not compensated or promoted as a consequence of money invoiced to or recovered from taxpayers

12. Prompt notice of any reimbursement due to you by the department

13. Attend the department’s annual meetings in convenient places to present your ideas

14. A 10-day notice before a tax on assets is enforced

15. A 30-day notice before confiscated assets are put up for sale

16. Any other rights the Commissioner of Revenue deems necessary and appropriate

Endnote

When you have to include both federal and Tennessee state taxes, determining what you have to pay taxes on and how much you have to pay out for your property can be challenging. You may find yourself owing more than you anticipated or paying too much. If you fall behind on your property tax payments, you may lose your Tennessee home as a result of a tax sale.

If you need to sell a house fast in Tennessee, we are Nashville cash home buyers, and we’ll help you skip the hassle of showings and uncertainty. Additionally, we buy houses in Knoxville in any condition and without commissions. Give us a call today!

Kev

Kevin is a real estate investor dedicated to helping homeowners sell their properties quickly and without the stress and hassle of a traditional listing.

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