By Michelle Price
UCBJ Managing Editor
PUTNAM COUNTY – Almost 37,000 property tax reassessments hit mailboxes recently and were met with a collective gasp. Many owners were shocked by the reassessment values, with many properties increasing 25 to 35%. The good news is that the increased property values don’t necessarily mean an increase in property taxes.
“When appraisals go up – and they have gone up in the county and all the cities – each one will have a new certified lower rate,” said Putnam County Property Assessor Steve Pierce. “That means it will bring in the same revenue for each jurisdiction. Which means that you and I would pay the same taxes as last year.”
State law prohibits property owners from paying more than their fair share of property tax because a reappraisal has occurred. It provides for adjusting the tax rate to a level that would bring in the same amount of revenue county wide as before appraisal, excluding new construction. This is called the certified tax rate and prevents local governments from experiencing a “windfall” on reappraisal years at the expense of the property owners.
“Like any year, the governing body of each jurisdiction, the city council or county commission, can set the tax rate,” said Pierce. “They can adopt the new certified tax rate, or they can raise it or lower it. That is probably the biggest misconception. Everybody thinks it’s a tax increase of 25 or 30% – whatever theirs went up – and it’s really not.”
In a reappraisal year, as in any other year, the city council or county commission will go through its normal budget process. If more revenues are needed to pay for an increase in budgeted expenses, then the property tax would be raised from the new certified tax rate. This is the only way that a property owner would pay more in property taxes from the reappraisal.
But just where does the reassessment value come from?
The state has a standard procedure that is used in doing reappraisals statewide. The appraisals are based on the previous two years property sales, 2019 and 2020 for this reassessment.
“They find a 1,500 sq. ft. ranch, vinyl siding home – basically a spec home – that’s what they call the average home in Putnam County, and then find the median price it is selling for,” explained Pierce. “This time it was a little over $130,000. They divide the sales price by the square footage and get a new base rate. Last time they did this in 2016, the base rate was at $73 sq. ft. This time it was at almost $88 sq. ft.”
According to Pierce, the quality of construction affects the appraised value.
“Anything above a spec house, such as brick, hardwood or some interior features that are higher construction, then the quality would go up from there,” explained Pierce. “The quality will raise the base rate a percentage that is determined by the table within this appraisal system.”
For properties such as hotels that don’t have sales within the last two years, appraisers use the Marshall Swift publication. This is “the” publication that appraisers use nationwide. They will pick out rates specific to region of the U.S. to use, and the state applies these rates to properties in the system.
There is an appeals process for property owners that disagree with the appraisal.
Property owners are advised to call the tax assessor and a field appraiser will visit and review the property. They will then try to come to an agreeable value with the property owner.
If an agreement is not possible, from June 1-30 the county appeals board, appointed by the county commission, meets to review the appeals. Pierce will advise property owners what information they need to bring when they come to the appeal board.
Most commercial appeals are done by an attorney or a tax agent. In Tennessee, tax agents are registered and licensed by the state. The appeals board has the authority to raise or lower the appraisal or to keep it the same.
Property owners who still don’t agree with the valuation can appeal it to the State Board of Equalization. Once appealed to the state board, civil procedures apply, and an administrative law judge oversees the appeal from that point on.
“For residential properties, it (an appeal to the state) is rare,” said Pierce. “Since I have been here, we haven’t had a residential property go to the state appeals board. We will have commercial properties each year appealed to the State Board of Equalization.”
If a property owner is still not happy after a hearing with the state board, they can appeal to the Assessment Appeals Commission, who will rule if the administrative law judge has done their job properly. The assessment can then still be further appealed to Chancery Court.
The assessor’s field agents will start the field reviews in July for the 2026 reappraisal.
New construction is added to the tax rolls as it is completed. The property was already included on the rolls and any buildings are prorated to the time of completion.
It is important that property owners know that the reassessment is not just a way for local jurisdictions to raise their revenues.
“This is a process that is state mandated we have to follow every five years,” added Pierce. “We want to be transparent with any taxpayer here. We want them to know that we serve them. We’re doing the job we’re tasked to do. We want to be transparent to the citizens, and we want to make sure that it is right.”
This is part one of a six-part series on real estate in the Upper Cumberland.
Part one in the series: Property reassessments go up, but taxes remain steady
Part two in the series: UC, nation facing housing shortage, not bubble
Part three in the series: A shortage of contractors drives up the new home market (coming soon)
Part four in the series: Building materials: How shortages are impacting housing market (coming soon)
Part five in the series: What you should know about the UC real estate market (coming soon)
Part six in the series: Realtor’s advice for buyers, sellers in today’s market (coming soon)