(a)

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Terms Used In Tennessee Code 67-5-203

  • Appraisal: A determination of property value.
  • Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
  • Deed: The legal instrument used to transfer title in real property from one person to another.
  • Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Lien: A claim against real or personal property in satisfaction of a debt.
  • Person: includes a corporation, firm, company or association. See Tennessee Code 1-3-105
  • Personal property: All property that is not real property.
  • Personal property: includes money, goods, chattels, things in action, and evidences of debt. See Tennessee Code 1-3-105
  • Property: includes both personal and real property. See Tennessee Code 1-3-105
  • Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
  • real property: include lands, tenements and hereditaments, and all rights thereto and interests therein, equitable as well as legal. See Tennessee Code 1-3-105
  • Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
  • State: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Trustee: A person or institution holding and administering property in trust.
  • United States: includes the District of Columbia and the several territories of the United States. See Tennessee Code 1-3-105
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(1) All property of the United States, the state of Tennessee, any county, or any incorporated town, city or taxing district in the state that is used exclusively for public, county or municipal purposes shall be exempt from taxation; provided, that real property purchased for investment purposes by the Tennessee consolidated retirement system shall be subject to property taxation.
(2) All property of any educational institution owned, operated or otherwise controlled by the state of Tennessee as trustee, or otherwise, shall be exempt from taxation.
(b)

(1) When all of the area that is assessed as a single unit by the assessor of property of any political subdivision is acquired in its entirety by the United States government, the state of Tennessee, or any agency or political subdivision thereof, any lien for property taxes assessed by the political subdivision for the year in which the property is so acquired shall be released on the approval of the assessor of property of the political subdivision assessing such taxes with respect to that portion of the taxes representing the remainder of the calendar year after the date of the instrument or conveyance by the property owner, or after the date of the entry of an order of possession, if the property is acquired by condemnation, and the property owner shall be relieved of all personal liability for that portion of the taxes.
(2) Either the condemnor or the property owner may request the assessor to provide such proration, which shall be based on the last made assessment and rate fixed, according to law, and the trustee shall accept tender of the amount determined to be owing.
(3) Where only a portion of the entire unit assessed for taxes by the assessor of property of a political subdivision is so acquired, the portion of the taxes for the entire year attributable to the part taken, where same is acquired by deed, shall be arrived at by dividing an amount equal to the assessed valuation of the portion taken, as agreed upon between the property owner and the assessor of property, by the present assessed valuation of the entire assessed unit and multiplying the resulting quotient against the amount of the whole tax assessed against the entire unit for the full year after which the portion of the property so acquired shall be relieved of the lien of the portion of the taxes for the remainder of the calendar year as provided in subdivision (b)(1), and the property owner shall be relieved of all personal liability as to the portion of the taxes as provided in subdivision (b)(1); provided, that, where the portion of the property is being acquired by condemnation, the court will determine the portion of the entire year’s taxes attributable to the part taken after hearing proof on behalf of the property owner and the taxing authorities, with the burden being on the taxing authorities to assure their proper appearance before the court.
(4) In the event of such an acquisition by deed, either the condemnor or the property owner may request the assessor to provide such proration, after the assessor has agreed with the property owner relative to the assessed valuation of the portion taken; and under either circumstances set forth in subdivision (b)(3), the proration shall be based on the last made assessment and rate fixed, according to law, and the trustee shall accept tender of the amount determined to be owing.
(c)

(1) If real property owned by the state or any political subdivision of the state is leased to a person, corporation, or other business entity for the purpose of operating a golf course or for the purpose of developing and operating a golf course, then the person, corporation, or business entity shall make payments in lieu of ad valorem taxes. Such payments shall be in an amount equal to the ad valorem taxes otherwise due and payable by a taxpaying entity upon the current fair market value of the leased real property.
(2) Nothing contained in subdivision (c)(1) shall be construed or applied in any manner that violates Constitution of Tennessee, Article XI, § 2.
(d) If real property owned by any political subdivision of the state is leased or conveyed in any manner to a person, corporation or other business entity which has the purpose or effect of reducing the real or personal property appraisal and tax collection of the county in which the real property is located, the lease, conveyance or other transfer arrangement may not be for a period in excess of thirty (30) years without approval from the county’s legislative body of the county in which the real property is located, unless the agreement requires the lessee to pay all real and personal property taxes to the county in which the property is located for any year after the initial thirty-year occupancy period as if such property was not owned by any political subdivision of the state or other tax exempt entity. This subsection (d) shall not apply to the payment in lieu of tax programs jointly administered by the municipality and the county in which the real property is located, whether through a jointly authorized entity or a memorandum of understanding.
(e)

(1) Real property owned by any political subdivision of the state that is leased or conveyed in any manner to a person, corporation, or other business entity shall be assessed as if the lessee were the owner, if:

(A) The lease or other transfer arrangement is for a period of fifty (50) years or more; or
(B) The lease, other than a lease negotiated pursuant to title 7, chapter 53, the Housing Authorities Law, compiled in title 13, chapter 20, or title 48, chapter 101, part 3, permits the lessee to acquire the real property for a nominal sum at or before the completion of the term.
(2)

(A) Notwithstanding any law to the contrary, if a lease is for less than fifty (50) years and is either extended or amended to be greater than fifty (50) years, or if a new lease is executed that has a term greater than fifty (50) years, any potential tax liability pursuant to this subsection (e) shall begin in the fifty-first year of the extended, amended, or new lease.
(B) Subdivision (e)(2)(A) shall only apply in any county having a population of over nine hundred thousand (900,000), according to the 2010 federal census or any subsequent federal census.
(C) This subdivision (e)(2) shall also apply to leases in effect as of May 18, 2015.
(f)

(1) Notwithstanding any law to the contrary, for the purposes of subsections (d) and (e), the term political subdivision of the state shall not include any airport authority or public entity created by or subject to title 42.
(2) Subdivision (f)(1) shall only apply in any county having a population of over nine hundred thousand (900,000), according to the 2010 federal census or any subsequent federal census.
(3) This subsection (f) shall also apply to leases in effect as of May 18, 2015.
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