The State of Tennessee requires counties to conduct reappraisals every four or six years to ensure that assessed values keep up with changes in the real estate market. 2013 is a reappraisal year in several of the larger jurisdictions and new notices of value are being issued within the next 30-60 days. See the chart below for the schedule pertaining to major metro areas.
Under most circumstances, this year's tax assessment will remain in effect until the next reappraisal unless the value is changed on appeal or there are physical changes to the property. Therefore, correcting any errors or valuation misjudgments now can provide multi-year tax savings.
New Growth in Hamilton County
We have identified different trends in the major counties. Appraisals are expected to reflect substantial new growth in Hamilton County. Assessor Bill Bennett said the number of real estate transfers recorded by the county totaled 14,101 last year, an increase from 11,822 in 2011.
"Things did turn around," Bennett said. "The economy has been better in Chattanooga and Hamilton County than in a lot of places.”
Overall Values Slide in Shelby County
It's a different story in Shelby County, where leaders are looking at budget cuts and possible tax rate increases thanks to falling property values.
"This is probably the first major decline for some municipalities here in Shelby County that we've seen in a long time," Assessor Cheyenne Johnson explained.
Naturally, not all properties will see a lower valuation. Class A and Class B multi-family will likely see an increase. Industrial warehouse property values should remain constant, excluding space larger than 500,000 square feet.
Lower values don't necessarily translate into lower tax bills because officials can simply raise their tax rates. Shelby County is considering a tax increase of 36 cents for Memphis residents and 34 cents for the county. So for every $100 of assessed property, the tax rate would increase to $4.38.
The assessor's office commissioned an independent capitalization rate study for the revaluation and will disclose the results in the coming weeks.
Businesses Foot the Bill
Whether values are trending up or down, commercial and industrial property owners shoulder the largest percentage of the tax burden.
Real property is classified by the Tennessee Constitution into sub-classifications that are assessed as follows:
Commercial and Industrial Property (including residential buildings with two or more rental units) - Assessed at 40% of value
Business Personal Property - Assessed at 30% of value
Residential and Farm Property - Assessed at 25% of value
Because of the way the way the system works, businesses have more at stake to make sure their property's tax assessment is accurate and equitable. The first step is an informal discussion with the assessor. If dissatisfied, owners can take their appeal to the County Board of Equalization, the State Board of Equalization and ultimately Chancery Court.