Conversation About Property Taxes Part II- Understanding the Imbalance

There are two factors that affect the property tax that a resident pays. The first component is the value of the property and the second component is the tax rate. If your property value goes up and the tax rate goes up, your taxes will be high. If your property value goes down and the tax rate goes down, your taxes will go down. However, while residents may know if the value of their house is going up or down, they have no way of knowing the tax rate because the rate is determined on a county wide basis.

What is “Certified Tax Rate  (CTR) or “Truth in Taxation?

The Tennessee Certified Tax Rate process is designed to ensure “truth-in-taxation” following a county-wide reappraisal. The process ensures the amount of total taxes collected for a county remain the same after a reappraisal, even if the combined value of all property in the county goes up. As a way to deter cities/counties from having revenues from reappraisals, the state law requires that the certified tax rate be adjusted to produce the same revenue as the prior year (the year before appraisal). This means if Metro raised $50,000 in property taxes on existing properties before reappraisal, then, it can only raise the same amount the following year after a re-appraisal. 

 Illustration:Simplified

Assuming in Yr 1, Total appraised taxable value of all homes in the county is $200,000  and the certified tax rate is 0.25 , the total property taxes revenue for the county will be 200000 x 0.25= $50,000

If total appraised taxable value of existing homes in Yr 2 increase to $250,000, the state prohibits the city/county from having the additional revenue from that appraisal. Instead the rate must be adjusted to produce the same revenue as before. In this case instead of a revenue of $62,500 (250,000 x 0.25), the rate will have to be adjusted down to 0.20 to yield the same revenue. 

Therefore Yr 2 revenue will be 250000 x 0.20  = $50000

  • Note the reduction in Certified Tax Rate from .25 to .20
  • The CTR is calculated on a county wide basis
  • This rule only applies to existing properties. Revenues will be added each year for new properties
  • NOTE: The taxable value of a residential property is 25% of the appraised value while commercial properties are taxed on 40% of appraised value

What Does This Mean for Residents?

For the last couple of years in Davidson County, here is what has been happening: 

If your property value goes down or remain the same, your property taxes will be reduced because of the reduced tax rate. However, even with a reduced overall tax rate in the county, if your property value goes up, you may see an increase in your taxes. 

For Metro Davidson County the certified tax rate in 2016 was 3.924. However after the 2017 appraisal year, the certified tax rate was reduced to 2.755 due to the growth in Nashville, which created increased property tax values for the county. The rate will remain 2.755 until the next appraisal, unless a vote is taken to increase it.

Also, during the last reappraisal in 2017, homes close to downtown saw an increase in their property values because of the surge in growth while the values of homes in the suburbs remained the same. So for example A $120K home in east Nashville in Yr 1 is now $240K in Yr 2, while a $500K home in Forest Hills remains the same.

When the county’s total appraised value went up, the CTR was reduced. Therefore for individuals in Forrest Hills where the property values remain the same, their tax bill went down because of the reduced CTR. On the other hand, individuals close to downtown where there is increased development paid more taxes. The CTR was down but they did not see the effect because their appraised property values went up.

Another thing that adds to the complication is that most of the districts with increased property values are taxed as Urban Service District because they receive metro services (garbage etc) while most of the suburbs are on a General service rate. The CTR for the Urban Service District is also higher than that of the General service district. Some cities like Bellemeade and Goodlettsville has additional city rates

This means that for the last couple of years in Davidson County we have been facing an imbalance in property taxes. Individuals with lower property values have been disadvantaged and having been paying more than others, because of where they live and some due to gentrification. We need to address this situation head- on and work to correct this inequity.  

How to Correct the Imbalance 

The only way to adjust Certified tax rate up is by vote of the council. 
Unless the council votes to increase the rate, the county will be limited to the same revenues and that will not help. Some of our residents, especially those that can afford to pay more will continue to pay less taxes while those with limited income will continue to pay more because of their locations.

For more information on the Certified Tax Rate, check out

As always, I welcome your comments, questions and suggestions.

The conversation about property taxes cannot be limited to one blog. I intend to have multiple post including one compiling answers to your questions. I also plan to attend community meetings and forums to keep the conversation going. The hallmark of being your representative is seeking residents input and I intend to do that throughout this process.

4 Comments

  1. Paul Stinson on January 31, 2020 at 10:00 am

    Councilmember Suara – Thanks for the information provided in your blog. This information is clearly written and is a great help in understanding these issues.
    I have several questions about the example used in this explanation regarding property tax assessment in the City of Forest Hills. While I do not reside in Forest Hill, I do live in a suburban area of Nashville. I am familiar with Forest Hills and believe it is generally regarded as a desirable place to live. First, does this example represent the actual situation? If assessments in Forest Hills, a very desirable area, did not increase during the last reappraisal, it would seem to indicate an issue with the appraisal process. I am curious as to what percentage of homes in Forest Hills did not experience an increase in assessment, or alternatively, what was the average change in assessment for all properties in Forest Hills as opposed to other areas located a comparable distance from the downtown area. Second, according to the Forest Hills website, “…City of Forest Hills provides many services such as chipper service, road maintenance, and stormwater management.” Since Metropolitan Government does not incur the expenses of providing these services to residents of Forest Hills, how are Metro property taxes adjusted to account for this expense avoidance?
    As I said, I do live in the suburbs. I owned a home near Forest Hills for 40 years, and do not recall the assessed value ever staying the same. Over the last five years that I owned that home, property taxes went up 5.07%. As a result of the last property reappraisal, property taxes at my current home increased by 16%. Over the past 10 years, property taxes for my current home have increased by 30.3%, for an average annual increase of 3.03%.
    I certainly don’t dispute your example using property in Forest Hills, and again, it was most helpful in understanding the underlying issue. It would also be very beneficial to understand just how prevalent this situation is in Davidson County and whether this situation points to an issue with how property reappraisals are done.

    • Zulfat Suara on January 31, 2020 at 10:49 am

      Thanks for your comment. Please note that I used Forrest Hill just as an example. The argument will be the same for a house anywhere in the county where the appraised value did not change a lot. I used Forest Hills the value of most of the homes in Forest Hills remain relatively constant (the same). The second reason is that I have a friend who lives in Forest Hills whose assessment went down. My goal was not to pick on the city, I have lots of friends and supporters there. But because the values of most home in that area and other suburb remain the same, most residents in the area paid less. The point of the argument is that if your appraised value remain the same, you will pay less taxes because our Certified Tax Rate had to be adjusted down.

      The issue is my opinion is not on how appraisals are done but the state law regarding the Certified Tax Rate. And as I explained in the blog, per state law, the rate can only go up by council vote. Thanks again for your comment

      • Paul Stinson on February 3, 2020 at 11:48 am

        Thanks for the prompt response, and this information is helpful in addressing my questions.
        A few comments:
        1. While I understand your illustration of the “imbalance” in property taxes is just an example, it would be interesting to know how many properties, or percentage of properties, had no increase in value from the last reappraisal in Davidson County. Perhaps that information could be produced by zip code or some other geographic label. Although I sympathize with anyone who experiences a significant increase in taxes, that high level information would be helpful to understand just how significant this situation in Metro Davidson County.
        2. I remain a bit confused about the “imbalance” referenced in this blog post. To me, that term can imply some sort of improper or unfair situation. In this case, it would seem that the difference in property taxes is simply a result of the reappraisal process itself and might be better described simply as a difference that is justified by that process.
        3. I fail to see how an increase in the property tax rate would address the “imbalance” since a higher tax rate would simply increase taxes on all property holders, but would not address the basic issue of some property increasing in value while other property had no increase as a result of the reappraisal.
        Thanks again for your reply to my original comment, and for your service to the citizens of Nashville.

        • Zulfat Suara on February 4, 2020 at 8:22 pm

          Thanks for your comment. For question 1, the assessor or the trustee might be in a position to provide such information. I can try to find to but with budget season coming up, not sure how soon can be. As for the second question, I used the word imbalance instead of equity , so as not to imply impropriety. However, there is an imbalance due to the reduction in tax rate some residents paid more and some less. Not intended but that was the consequence per state law. And for 3, yes EVERYONE receive increase taxes not some.

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