How to Calculate Your Tax Bill

Property taxes in Tennessee are calculated utilizing the following four components:

1.) APPRAISED VALUEThe Appraised Value for each taxable property in a county is determined by the county property assessor.

2.) ASSESSMENT RATIOThe Assessment Ratio for the different classes of property is established by state law (residential and farm @ 25% of appraised value, commercial/industrial @ 40% of appraised value).

3.) ASSESSED VALUEThe Assessed Value is calculated by multiplying the appraised value by the assessment ratio.

4.) TAX RATEThe Tax Rate for each county is set by the county commission based on the amount of monies budgeted to fund the provided services. These tax rates vary depending on the level of services provided and the total value of the county’s tax base.

 

The State

• State Board of Equalization establishes policies and procedures for local Assessors of Property and hears property appeals beyond the county level.

• Division of Property Assessments (a division of the Comptroller of the Treasury) monitors the work of Assessors to ensure proper procedures are followed, provides technical assistance during reappraisal programs, and provides manuals and educational programs for use by Assessors

 

The Assessment Cycle

• Property appraisals are established during periodic reappraisal programs using current real estate values on either a 6 year, 5 year or 4 year cycle

• Between reappraisals, the Assessor’s appraisals generally remain constant, with the exception of instances where the property has changed (new buildings , additions, demolitions, etc.)

• In addition to assessing new construction annually, the Assessor’s office performs a systematic field review of a portion of the county each year so that during a reappraisal cycle all parcels of property are reviewed

• Changes to the property discovered during review may be added to, or subtracted from the property value between reappraisals, but with the appraised value based on the previous reappraisal program

 

The Appraisal Process

• An appraisal is an estimate of the most probable selling price of a property

• Mass appraisal techniques are employed

• Physical characteristics listed (dimensions, construction type, age and condition of buildings; size and features of land)

• Computer resources used as a tool to assist in the intensive analyses and calculations required

• Assessor’s experience and appraisal judgment are important

 

The Assessment Process

• Property is classified based on its use and statutory assessment percentages are applied to appraised values

Residential property25%

Farm property25%

Commercial and industrial property40%

Public utility property55%

Business personal property30%

• Example: A residence appraised at $ 100,000 would have an assessed value of $25,000

• Assessment Change Notice required to be sent when the value or classification changes

 

Appeals

• Basis for an appeal: owner’s property value too high, another owner’s value too low, incorrect classification (real vs. tangible personal property, commercial vs. farm or residential property). Tax amounts are not a valid basis for appeal.Steps in an appeal: informal discussion with Assessor, County Board of Equalization (meets beginning June 1), State Board of Equalization (must first appeal to county board), Chancery Court

The Taxation Function

• Property tax rate is established by the County Commission and city governing bodies

• Assessor provides assessed value totals to county and city governing bodies

• Total assessment and estimates of other revenue are combined with budget projections to determine the property tax rate

• In a reappraisal year, if the local governing body intends to adopt a tax rate that would generate more revenue than the previous year, a public hearing must be advertised and held

Source: Comptroller.tn.gov