Re-Evaluating Property Reappraisal Cycles

• Currently, property is reappraised on a four to six-year basis, depending upon the local government’s determination. 

• In 2024, legislation (HB2057/SB1946) was introduced to allow for local governments to more frequently reappraise their property – moving to a one to four-year basis instead of the current four to six-year cycle. The legislation passed the Senate and was ultimately held on the desk on the House Floor after being calendared for consideration. 

• Last year, Tennessee Farm Bureau policy was changed to add language relative to property reappraisal.  

• Property tax payment changes are required to be revenue neutral, meaning the new certified tax rate will generate the same amount of tax revenues for a city or county as the amount billed in the previous year. 

• The Comptroller of the Treasury manages Tennessee property assessment data and serves as a great resource to understanding property tax assessment. 

1. As a landowner, are you able to budget for your property taxes appropriately? 
2. Has your county government had to raise property tax rates in response to the appraisal ratio being applied to annually appraised property? 
3. Is TFBF’s position on property reappraisal cycles sufficient? If not, how should it be changed? 

Property owners across the state understand the feeling of receiving their updated property tax assessment in the mail, and the potential sticker shock which could come along with it. As Tennessee continues to grow at an exponential rate, property values have also continued to climb year over year as demand keeps real estate markets hot. This has resulted in Tennessee lawmakers and officials at the Comptroller of the Treasury looking to find creative ways to allow local governments to adjust to growth without breaking the bank. One of those ways came forth in the 2024 legislative session, when a bill (SB1946/HB2057) was filed which would allow for local governments to more frequently reappraise their property. The legislation passed the Senate unanimously, but ultimately was held on the desk on the House Floor after being calendared for consideration, thus no vote was taken.

Read SB1946/HB2057 HERE.

Because the legislation was not signed into law, lawmakers and stakeholders are spending the off-season evaluating the idea of more frequent reappraisal cycles. Proponents of the originally drafted language claim more frequent reappraisal allows counties to manage growth’s impact on the county while providing property owners with smaller increases instead of potential large jumps over time.

What does more frequent reappraisal look like? Currently, property is classified based on its use and statutory assessment percentages are applied to appraised values. Property appraisals are established during periodic reappraisal programs set by local governments using current real estate values on either a six-year, five-year, or four-year cycle. The above-mentioned legislation, if passed, would have changed the cycles to either a one-year, two-year, three-year, or four-year cycle. Currently, 69 Tennessee counties operate under a five-year cycle, while the other 26 are split between a four and six-year cycle, meaning at least 82 counties would be required to adopt a new appraisal cycle.

The Tennessee Certified Tax Rate process is designed to ensure truth in taxation following a county-wide reappraisal. The process ensures the amount of total taxes collected for a county remain the same after a reappraisal, even if the combined value of all property in the county rose or fell following the reappraisal. In short, once a reappraisal is conducted, the county government works with the state to adjust the property tax rate in order for tax rates to go down when appraisal rates go up.

It’s important to note property tax payment changes are required to be revenue neutral, meaning the new certified tax rate will generate the same amount of tax revenues for a city or county as the amount billed in the previous year. The only way a certified tax rate can be exceeded, is in the event a city council or county commission holds a public hearing and adopts a new, higher rate.

During this process, some stakeholders have issued caution to lawmakers that such changes could have unintended consequences for commercial and business properties which are already appraised more regularly than other types of property. However, every two years the county conducts an appraisal ratio, to determine how close the original assessor’s value is to the current market value. The formula divides the assessor’s appraised value by the current sales price to determine exactly what percent of the actual market value the assessor’s original appraised value is.

Why does this matter? Ratios allow local governments to ensure all property owners are taxed equitably between reappraisal cycles. While the assessed value of a property may not be changed mid-cycle, other properties are appraised on an annual basis, such as public utilities and business properties. Because they are assessed more regularly, their value is often higher than those properties assessed less frequently. Once a ratio study is complete and the numbers are adopted, the values on all properties, both residential and commercial are equalized.

The Comptroller of the Treasury manages Tennessee property assessment data and serves as a great resource to understanding property tax assessment. Click HERE for more information and to visit their website. 

Last year, Tennessee Farm Bureau policy was changed to add language relative to property reappraisal. You can find the pertinent policy below. 

Tennessee Farm Bureau
State and Local Taxes (Partial) 

Property values do not change at the same rate on all properties. Growth areas typically experience more rapid market value increases than non-growth areas. Farmers and established property owners should not unfairly bear a community’s growth burden. Reappraisal resets property values to the current market value and equalizes the property tax burden for all taxpayers. Reappraisals should ensure every property owner pays their fair share.  

Due to the high growth occurring in some areas, we urge the state to conduct an economic analysis reflecting the cost of more frequent appraisals and the impact of the changing tax burden on property owners. With an equalized assessment, property taxes will fairly and accurately reflect a property’s value, the value of all property within the county, and the county’s budget. 

We favor continuing the present system of locally assessed personal property.