How to Calculate Property Taxes
Components of the Property Tax
Property taxes in Tennessee are calculated utilizing the following four components:
1. APPRAISED VALUE
2. ASSESSMENT RATIO
3. ASSESSED VALUE
4. TAX RATE
The APPRAISED VALUE for each taxable property in a county is determined by the county property assessor. This amount is an estimate of market value based on an established set of tables, manuals, and procedures mandated by state statute, and is intended to provide an equal treatment of all properties in the jurisdiction for tax purposes.
The ASSESSMENT RATIO for each different class of property is established by Tenn. Constitution, Art.2, § 28 and TCA 67-5-801 state law as follows:
|
Real Property |
|
|
Ratio |
Property Classification |
|
25% |
Residential / Farm |
|
40% |
Commercial / Industrial |
|
55% |
Public Utility |
|
Tangible Personal Property |
|
|
Ratio |
Property Classification |
|
30% |
Commercial / Industrial |
|
55% |
Public Utility |
The ASSESSED VALUE is calculated by multiplying the appraised value by the assessment ratio.
The TAX RATE for each county and municipality is set by the County Commission or the City Council 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.
Calculating Your Property Taxes
The example below is for a typical residential property with an Appraised Value of :
$ 100,000.00
and the most recent Montgomery County Tax Rate :
$ 3.14 per $100 of assessed value or .0314
Step 1:
Multiply the Appraised Value times the Assessment Ratio
$ 100,000 X 25 % = $ 25,000
This gives you the property’s Assessment Value
Step 2:
Multiply the Assessment Value times the Tax Rate
$ 25,000 X (3.14/100) = $ 785
or
$ 20,000 X .0314 = $ 785
This gives you the amount of the county property tax bill for this particular property.
If your property is also in the city, follow the same steps, using the city tax rate to figure your city property tax bill.
The billing amount you receive on your actual tax bills may vary slightly based on the method used for rounding.
Note: The tax rates for the current tax year are established by the County Commission and City Council in July of that year. The best possible estimate of taxes made between January 1st and July is done by utilizing the tax rates from the previous year.
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