Adjustments on Changed Properties that Impact Valuation

Tennessee law provides a means for the Assessor to adjust the appraisal and assessment on changed properties that occur after January 1 and before September 1 of any given year. The law, TCA § 67-5-603, refers to changes which potentially could lower property value such as when “a building or improvement shall be moved, demolished or destroyed, or substantially damaged by fire, flood, wind, or any other disaster, and is not restored and no other improvement is constructed in its place before September 1 of that year.”

Our office receives notification of most qualifying changes from other official sources — permits issued by Metro Codes Administration, satellite cities’ Codes authorities and fire damage reports from the Nashville and satellite fire departments. We also become aware of changes through periodic visual inspections by our appraisal staff and from notification by property owners, which then require a visual inspection.

Changes that can raise the property value considered under the law include construction or addition of improvements between January 1 and September 1 that are “completed and ready for use or occupancy,” which is further defined as “when the structural portion of the building or improvement is substantially completed, even though the interior finish or certain appointments may be left to the choice of a prospective buyer or tenant after consummation of a sale or lease of the property.”

The law also provides, “In the event an improvement or new building shall be considered incomplete for assessment purposes on January 1 of any year, the owner of such improvement or new building shall, not later than February 1 of that year, submit to the Assessor of Property, in writing, the total cost of all materials used in such incomplete structure as of January 1, and the Assessor of Property shall assess such incomplete structure as real property, based on the fair market value of the materials used therein. Actual cost of all materials shall be prima facie evidence of the value of such incomplete improvements.”

In either case, whether increasing or lowering a property’s value, the law provides that any adjustment must be prorated to reflect only the amount of time during the tax year that the change affected the property’s value.