2009 Property Tax Assessments Create Unique Opportunity
for Tennessee Property Owners

The downturn in the national and Tennessee economies could pose a unique opportunity for Tennessee landowners to seek reductions in their property tax assessments. Property owners in all 95 Tennessee counties should review their assessments in light of market conditions. This is particularly true in the 16 counties that will undergo a county-wide reappraisal this year and even more so in Tennessee’s “big four” counties of Davidson, Hamilton, Knox and Shelby where property tax rates are the highest.

Most counties reappraise property on a four-year reappraisal cycle, which means a reduction in the first year of the four-year cycle will be carried forward for each of the following three-years of the cycle, irrespective of any improvement in the national or state economies. Moreover, under Tennessee’s property tax laws, property is required to be mass appraised as of January 1, 2009, yet each property owner is entitled to have his or her property valued at fair market value, which in many cases is below the value produced using mass appraisal techniques.

In all likelihood, the value produced using mass appraisal techniques employed by Tennessee county assessors will be based on pre-recession data (e.g., sales, cap rates, etc.) that will tend to overstate the value of an owner’s property and potentially result in higher property taxes. If an owner’s property is not challenged, their property value will remain in place for the entire reappraisal cycle. If property value is reduced for the 2009 tax year, it will remain reduced for the entire reappraisal cycle. Needless to say, this is a tremendous opportunity for property owners to lock in substantial reductions in property taxes. The types of properties that could be most affected by the economic downturn include retail, distribution, offices, manufacturing, hospitals, hotels, multi-family and golf courses to name a few.

For additional information, please contact Paul D. Krivacka at (615) 259-1307 or by e-mail at paul.krivacka@arlaw.com.