A buyer's agent in Tennessee is helping a client evaluate the property tax burden on a home listed at $400,000. The county tax rate is $3.00 per $100 of assessed value. The agent correctly explains that the tax is not calculated on the full $400,000. Which explanation accurately describes why?
Correct Answer
A) Tennessee assesses residential property at 25% of appraised value before applying the tax rate
Tennessee's tiered assessment system requires residential property to be assessed at 25% of its appraised (market) value. The tax rate is then applied to this assessed value, not the full market value. For a $400,000 home: assessed value = $400,000 × 25% = $100,000; annual tax = ($100,000 ÷ $100) × $3.00 = $3,000. The agent is correct that the tax base is 25% of market value.
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