Tennessee Reappraisal Watch

Several counties, including the cities of Chattanooga, Franklin, Memphis, and Nashville, are undergoing reappraisal for taxation in 2025. In late April to early May, taxpayers will receive notices of assessment, as values are updated from January 1, 2021, to a January 1, 2025, valuation date. Davidson and Shelby counties have already released their commercial values, and Hamilton and Williamson notices are expected the first week of May. Average increases in values for Hamilton and Davidson are expected to be around 40%, while smaller value increases are expected in Williamson and Shelby counties. Although some commercial properties will see significantly higher assessments, not all will pay higher taxes as a result.

What Assessment Changes Are Expected? 

With four years between reappraisals, value changes can be significant. Nashville’s previous reappraisal in 2021 resulted in a median 34% increase in values of commercial real estate, while values in Franklin grew by 32% overall. Market volatility between 2021 and 2025 has resulted in extreme shifts between commercial market sectors. Based on our analysis, backed by data from CoStar’s property tax and analytics platform, we anticipate that industrial and retail properties will see the highest increases, and properties in all sectors are at risk of overassessment.

Retail: CoStar reports indicate that the median price per square foot for retail in Nashville has increased by 31%, driven by rent growth and steady occupancy rates (except for malls).

Industrial: Median sale prices per square foot have risen by 45%, the highest percentage of all categories, although increasing availability and cap rates have resulted in declines from the 2023 peak. Assessed values for industrial properties may be overstated if recent declines are not captured.

Office: New inventory has contributed to declining rent growth and increasing vacancies. Capitalization rates have increased. Median sale prices for office properties have declined since 2021. New inventory and lower sale volumes in 2023 and 2024 may result in overassessments for properties in this sector, particularly in the downtown area.

Multifamily: Median sale prices peaked in 2022 and fell off in 2023-24, fueled by downward pressure on capitalization rates. While asking rents have remained relatively steady, record new supply has increased vacancy rates. Overall assessed values are expected to increase moderately. Properties in high demand areas such as downtown, midtown, Germantown, the Gulch, and Nashville Yards are likely to see assessment spikes.

Land: Recent sale prices for land, particularly in the high demand areas identified above, have been well more than assessed values, and our property tax experts expect that some increases could be extreme. 

Hotels: In all four of the major metro counties across Tennessee, the last reassessment was in 2021, and prior year hotel values reflect the losses at the peak of the Covid pandemic. The hospitality markets in both Memphis and Nashville have rebounded significantly since 2021, and the reassessment values will reflect the improved performance. Other markets like Williamson (Franklin) and Hamilton (Chattanooga) are not expected to see such drastic increases, although values will likely increase because of the reassessment.

What Impact Will New Assessments Have on Property Taxes? 

State law requires that the new assessed values must raise the same amount of tax revenue as the previous values, so rising appraisals do not result in corresponding increases in taxes. To offset increases in valuations, the county and city will typically decrease the tax rate. If your property’s assessment increases by 30%, but the average increase for all properties is 50%, your property is likely to pay lower taxes, even though its assessed value has gone up. Unless the city and school districts raise the millage rates, only those properties with increases in assessment that are higher than the average increase will pay higher taxes. Based on the sale price trends outlined above, industrial and retail properties are likely to be hardest hit by tax increases.

Should You Appeal Your Assessment? 

Every assessment should be reviewed to ensure it correctly reflects the physical characteristics and market circumstances of the property as of the January 1, 2025, valuation date. An appeal is the only way to impact the amount of property taxes you pay, and a successful appeal in 2025 can reduce your property taxes for the next four years.

If you own property in one of the 2025 reassessment counties listed below, watch out for your notice of assessment over the coming weeks. You will only have 30 to 60 days to review the new value and file an appeal. Ryan’s team of Tennessee accredited consultants is the largest in the state. Give our experts a call for a complimentary consultation.

Tennessee Counties Reappraising for 2025

TECHNICAL INFORMATION CONTACTS:

Ashley Brown
Principal
Ryan
404.942.6358
ashley.brown@ryan.com

Ralph Mainland
Director
Ryan
615.986.1775
ralph.mainland@ryan.com

Caitlyn Smagh
Director
Ryan
404.942.6380
caitlyn.smagh@ryan.com

The material presented in this communication is intended to provide general information only and should solely be seen as broad guidance and not directed to the particular facts or circumstances of any individual who may read this publication. No liability is accepted for acts or omissions taken in reliance upon the content of this piece. Before taking (or not taking) any action, readers should seek professional advice specific to their situation from Ryan, LLC or other tax professionals. For additional information about this topic, please contact us at info@ryan.com.