Property Appraisal for Tax Purposes
Unlike an appraiser in the private sector who is hired to ascertain the value of one particular property as of a given date, the Assessor of Property's mission is much broader in scope. The goal of the Assessor is to estimate fair market value for all property in the county. Fair market value is defined as how much a property would sell for, in an open market, under normal conditions. To determine market values, the assessor must be familiar with all aspects of the local real estate market, such as: what different types of properties are selling for, local construction and repair costs, normal operating expenses, typical rents, and current financing charges for borrowing money to build or buy property.
The rules governing the tax appraisal process in Tennessee are based upon the same principles and procedures that are used throughout the appraisal profession. There are three basic approaches to the valuation of real property:
- The MARKET approach involves comparison of a property to other properties with similar characteristics that have recently been sold.
- The COST approach involves estimating the replacement cost of a structure, and adjusting that estimate to account for depreciation.
- The INCOME approach is an analysis of a property's value based on its capacity to generate revenue for the owner.
Frequently Asked Questions
How is property appraised?
There are three “Approaches to Value” that are used worldwide in the appraisal profession. These are the Cost, Income, and Market approaches. The Cost Approach calculates the cost to build a structure today, and then discounts that cost, for the age and condition of the building to arrive at a value. The Income Approach measures how much income a rented property will generate for its owner. The Market Approach compares a property, to sales of similar properties, to estimate a value.
What’s the difference between an Appraisal and an Assessment?
An Appraisal is an estimate of market value. An Assessment is the value on which taxes are based. Some states assess 100 % of market value, so the Appraisal and Assessment are equal. By law, Tennessee has “Fractional Assessment” which means taxes are based on a fraction of the Appraisal amount. Tennessee law dictates the following assessment levels:
Who does the Assessor’s appraisals?
All members of the Assessor’s staff are crossed trained in various aspects of the mass appraisal process and work together as a team to fulfill the responsibilities of the Assessor’s office. The Assessor also has the resources of the State of Tennessee Division of Property Assessments ( DPA ) to assist in the mass appraisal process. The DPA assists the Assessor with oversight and may provide legal resources.
How often does the Assessor appraise my property?
One of the Assessor’s responsibilities is to maintain the county’s appraisal records as accurately as possible. The Assessor strives to discover changes to a property, which affect that property’s value, and adjust the county’s appraisal records accordingly. If no changes occur, or changes have not been discovered, someone from the Assessor’s office will visit each property in the county once in-between the county-wide reappraisals.
How often is the whole county reappraised?
Montgomery County is currently on a 5-year reappraisal cycle. County-wide reappraisals occurred in Montgomery County in 1991, 1997, 2003, 2009, 2014, and 2019. The frequency of the reappraisal cycle can be changed by a vote of the County Commission. Consequently the frequency of reappraisals varies from county to county. Some counties are on a 4-year cycle, others on a 5-year cycle, and still others on a 6-year cycle.