Property Tax Resources

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Tennessee Property Tax Updates

UPDATED september 2022

Values Can Increase Mid-Year for New Construction

Tennessee Taxpayers developing new property may be surprised to receive a value increase notice late in the year, well after the deadline for assessors to certify their January 1 values.  By statute, Tennessee assessors are allowed to add the value of newly constructed improvements to the tax rolls during the current year so long as the improvements are “substantially complete” before September 1.  In that case, the assessor’s value will be prorated between the January 1 value and the value of the property as-of the date of completion.

The term “substantially complete” leaves much discretion in the hands of the county assessors, who may be aggressive about deciding when a property should come on the tax rolls.  An assessor who sees that the exterior shell of a building is enclosed may not bother to inspect the interior before deciding the building is “substantially complete.”  That building could still be several months away from producing its first revenue.  An appeal to the State Board of Equalization would be required to remedy the situation.

Additionally, assessors do not always issue their new construction increases timely.  The proration statute does not give them a deadline, but a Tennessee Attorney General’s opinion points to September 1 of the following year.  A Taxpayer who receives a value increase in October of the following year may not see a basis to challenge the value because it is fair or low.  However, they have a strong argument that the entire assessment is illegal and should be void.

Tennessee’s system of increasing values mid-year for new construction denies Taxpayers the opportunity to appeal those increases to the county boards of equalization, whose appeal deadlines have generally passed.  It creates a number of potential pitfalls that Taxpayers can avoid by acting quickly and consulting with experienced local counsel as soon as the notice is received.

Andrew M. Raines
Evans Petree PC
American Property Tax Counsel (APTC)

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