Nashville’s booming economy and real estate market offer great opportunities for small businesses and investors to grow and thrive. However, as a property owner in the city—whether of residential or commercial real estate—one disadvantage you need to face amid the growing economy is rising property taxes.
The average property tax bill in the city has increased by more than 50% over the past decade, and many homeowners are struggling to keep up with the rising costs. Commercial property owners pay some of the highest property taxes in the country, which can make it difficult for businesses to remain competitive.
The good news is, with the help of your CPA firm, you can find some relief by carefully navigating Nashville’s property tax process. Here are a few tips to consider:
1. Understand your tax assessment
Property taxes are based on the assessed value of your property, so it’s important to understand how that value is determined. Make sure you review your tax assessment carefully and challenge it if you believe it is inaccurate.
Your property is assessed based on the estimated values of similar properties in the area. This rather vague and general process makes an assessment open to questions and mistakes. Add to this the possibility of errors on the part of the assessor and you might get sufficient grounds to challenge your property’s assessment.
2. Take advantage of tax exemptions and incentives
Ask your CPA about tax exemptions and incentives available to homeowners and businesses in Tennessee. If you qualify, you can potentially enjoy savings on your property taxes.
This includes Tennessee’s homestead exemption code, which states that if you own a property and use it as your primary residence, you are allowed property tax exemption of up to $35,000. If you and your spouse jointly own and use the property, your exemptions go up to a maximum of $52,500. To qualify for homestead exemption, you must either be disabled, elderly, a disabled veteran, or the spouse of a disabled veteran.
Tennessee’s PILOT (Payment in Lieu of Tax) program provides incentives to businesses who rent in a government-owned property and spend on expenses such as additional jobs or development of the property instead of paying property taxes.
Certain organizations may also be exempted from paying property taxes. These include nonprofit, religious, scientific, educational, and charitable institutions. Qualified historic properties may also be eligible for partial property tax exemptions on improvements or restorations made on the property.
3. Consider appealing your property tax bill
If you believe your property tax bill is too high, you may appeal it and request a reappraisal. This can be a complex process, so it’s important to seek the advice of your CPA. You may ask for an informal review, and if you don’t agree with the results of the review, you can schedule a formal appeal with the Metropolitan Board of Equalization. If you are still not satisfied with the result of your appeal with the MBOE, you can appeal to the State Board of Equalization.
Part of good financial management is understanding your tax liabilities and knowing how you can save on these costs. Your CPA will help reveal the opportunities you can take advantage of and safeguard your interests at every step.
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