If you own a short-term rental property in Sevier County, Tennessee, you should be aware of a recent decision by the county board of commissioners that will increase the property tax rate on these rentals. The decision affirms a 2021 state law that changes the property tax assessment rate for all short-term rentals from a 25% residential classification to a 40% commercial classification.
This will impact over 10,000 short-term rental properties in Sevier County, including those listed on platforms like Airbnb and Vrbo.
The county spokesperson has confirmed that this decision affirms a state law that went into effect in 2021 and subsequent guidance from the state Comptroller’s office. The law stipulates that properties used as short-term rentals are classified as commercial properties unless certain exemptions are met. Essentially, properties with a business license that are a short-term rental and not the owner’s principal residence will be subject to the change in classification.
Out of approximately 13,000 identified overnight rentals in Sevier County, 2,500 were already being assessed at the 40% rate prior to the resolution. A rental cabin with an appraised value of $500,000 would go from paying $1,850 in annual property county tax to $2,960. The increase is approximately $222 per $100,000 of appraised value on short-term rentals. This increase will generate an estimated $8 million of new revenue for the county.
With a county property tax rate of $1.48 per $100 of assessed value, Sevier County maintains one of the lowest property tax rates in Tennessee.
Despite this increase in property tax for short-term rentals, on average, short-term rentals across Sevier County are undervalued by over 53% since the last reappraisal in 2021, according to Sevier County Director of Public Affairs Tyler Basler.
The changes will be reflected on tax bills scheduled to go out in October 2023. The image below is the assessment change notice you should receive, If you own a short-term rental in Sevier County, Tennessee.
It is important to be aware of these changes and budget accordingly to avoid any unexpected costs.
This information was provided by WATE. You can read the news article here.
Interested to learn more about Sevier County and the surrounding areas property tax rates, click here to do so!