TennesseeLocal governments can adopt rent-based tax valuation rules for rentals
If a city or county adopts the rules, owners may request income-based tax valuations for eligible rentals developed on or after July 1, 2026.
What it does
Where a city or county adopts the rules, owners may request income-based tax valuations for eligible rentals that account for rent limits and property risks. The rules apply to properties developed on or after July 1, 2026.
Owners of covered properties must tell the assessor about use restrictions, foreclosure proceedings, and requests to change classification, then file information for the valuation. Missing a required notice can make an owner liable for overdue taxes, interest, and penalties.
Argument forEligible property owners could receive valuations that account for rent limits and property risks, which may better reflect restrictions on income and control.
Argument againstOwners could owe overdue property taxes, interest, and penalties if they miss a required written notice about restrictions or foreclosure.
More detail
Assess covered rental properties using income, rent comparisons, and specified capitalization rates. The rules cover residential properties or projects with at least four units and government incentives tied to limits on rents for low-income renters. Low-income renters earn no more than 80% of area median income. Assisted living facilities, duplexes, and single-family homes are excluded, unless the smaller property is commercial or part of a larger covered property. The city or county must adopt this section by ordinance or resolution. The owner must notify the assessor whether the owner requests this classification. The valuation excludes low-income housing tax credits and uses a capitalization rate at least as high as the rate for unrestricted rentals. The valuation rules take effect July 1, 2026, and apply to residential properties and projects developed on or after that date. The state publishes rate ranges beginning with tax year 2026.
Notify the property assessor about specified events and file information needed for the valuation. Owners of covered properties must report when government use restrictions begin or end, whether they request classification or its withdrawal, and when foreclosure proceedings are brought. Notices must be in writing and filed by December 31 of the year the event occurs. An owner who fails to give a required notice is liable for delinquent property taxes, interest, and penalties. Each written notice is due by December 31 of the calendar year in which the reported event occurs.
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Where it stands
- Introduced
- Passed Senate
- Passed House
- To Governor
- Became Law
Looking ahead
No hearings or votes scheduled.
History
- 2026
- May 27Pub. Ch. 1053Latest
- May 27Effective date(s) 05/22/2026, 07/01/2026
- May 22Signed by Governor Bill Lee.Became Law
- May 11Transmitted to Governor for action.To Governor
- May 7Signed by H. SpeakerMajor
- Apr 30Signed by Senate SpeakerMajor
- Apr 29Enrolled and ready for signaturesMinor
- Apr 24Sponsor(s) Added.Minor
- Apr 22Senate adopted Amendment (Amendment 1 - SA0869)
- Vote recorded FLOOR VOTE: REGULAR CALENDAR PASSAGE ON THIRD CONSIDERATION 4/22/2026 Passed. Result: pass.Lower
- Vote recorded FLOOR VOTE: as Amended Third Consideration 4/22/2026 Passed. Result: pass.Upper
- Apr 22Passed Senate as amended, Ayes 30, Nays 0Passed House
- Apr 22Engrossed; ready for transmission to HouseMinor
- Apr 22Subst. for comp. HB.Major
- Apr 22Am. withdrawn. (Amendment 1 - HA1162)Minor
- Apr 22Passed H., Ayes 69, Nays 15, PNV 7Passed Senate
- Apr 21Placed on Senate Regular Calendar for 4/22/2026
- Mar 25Placed on Senate State and Local Government Committee calendar for 3/25/2026
- Vote recorded SENATE STATE & LOCAL GOVERNMENT COMMITTEE: Recommended for passage with amendment/s, refer to Senate Calendar Committee Ayes 5, Nays 4 PNV 0 3/25/2026 Passed. Result: pass.Upper
- Mar 25Recommended for passage with amendment/s, refer to Senate Calendar Committee Ayes 5, Nays 4 PNV 0
- Mar 24Action deferred in Senate State and Local Government Committee to 3/25/2026
- Mar 24Placed on Senate State and Local Government Committee calendar for 3/25/2026
- Mar 18Placed on Senate State and Local Government Committee calendar for 3/24/2026
- Mar 17Action deferred in Senate State and Local Government Committee to 3/24/2026
- Mar 11Placed on Senate State and Local Government Committee calendar for 3/17/2026
- 2025
- Mar 11Assigned to General Subcommittee of Senate State and Local Government CommitteeMinor
- Mar 4Placed on Senate State and Local Government Committee calendar for 3/11/2025
- Feb 28Sponsor(s) Added.Minor
- Feb 25Action deferred in Senate State and Local Government Committee to 3/11/2025
- Feb 18Placed on Senate State and Local Government Committee calendar for 2/25/2025
- Feb 12Passed on Second Consideration, refer to Senate State and Local Government CommitteeMinor
- Feb 10Introduced, Passed on First ConsiderationMinor
- Jan 30Filed for introductionIntroduced
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