Tennessee treats any building with two or more rental units as industrial and commercial property, so a Knoxville apartment building is assessed at 40% of its appraised value rather than the 25% applied to owner-occupied homes. That assessed value is then taxed twice: once at the Knox County rate of $1.0158 per $100 and, inside city limits, again at the City of Knoxville rate of $1.3956 per $100, the two certified rates adopted for fiscal year 2026-27 after the 2026 countywide reappraisal. Everything else about Knoxville apartment property taxes, from how the assessor arrives at value to when the bills are due and how to contest them, flows from those three numbers.
Why apartments fall in Tennessee’s 40% commercial class
Tenn. Code Ann. § 67-5-501(11) defines residential property as real property used for dwelling purposes that contains not more than one rental unit, and then says that dwelling property containing two or more rental units “is defined and shall be classified as ‘industrial and commercial property.'” The Tennessee Attorney General restated the same rule in a 2025 opinion on residential classification, and the Comptroller’s property assessment glossary spells out the practical result: industrial and commercial property is assessed at 40% of appraisal value.
The assessment ratios themselves come from Tenn. Code Ann. § 67-5-801 and are listed on the Comptroller’s explanation of reappraisal and the certified tax rate: farm and residential property at 25% of fair market value, commercial and industrial property at 40%, and public utility property at 55%. The City of Knoxville’s property tax page lists the same real property ratios and adds a fourth that matters to landlords: tangible personal property used in a business is assessed at 30%.
The line between a 25% parcel and a 40% parcel is drawn at the second rental unit, not at five units or any lender’s definition of multifamily. A duplex with two rental units is in the commercial class under the statute. Misclassification is also a known problem statewide. In a February 2025 report on Rutherford County, the Comptroller’s Division of Property Assessment flagged roughly 12,000 parcels for review and the county identified 590 that needed to move into the commercial class. Knox County owners should read the class shown on their assessment notice, because the classification can be appealed along with the value.
Personal property schedules
Because a rental property is a business in the eyes of the assessor, the furniture, appliances and equipment an owner supplies are taxable tangible personal property. The Knox County Property Assessor’s calendar shows Personal Property Schedules mailed to business owners by February 1, with September 1 as the last day to file an amended schedule for the previous tax year. An owner who never files loses the protection of that September 1 cutoff on back assessments.
How Knoxville apartment property taxes are calculated
The arithmetic is the same across Tennessee. Appraised value times the assessment ratio gives assessed value. Assessed value divided by 100, times the tax rate, gives the tax. For an apartment building that means appraised value times 0.40, divided by 100, times each rate that applies to the parcel.
The Knox County rate
Every parcel in the county pays the county levy. On August 31, 2026, the Knox County Commission took up Resolution R-26-8-911, which accepts the new certified rate of 1.0158 calculated by the Property Assessor and amends the rates for the fiscal year that began July 1, 2026 and ends June 30, 2027. The rate breaks down into $0.4592 for the General Fund, $0.2983 for Schools General Purpose and $0.2583 for General Debt Service. For comparison, the county’s finance office lists the fiscal 2026 levy, the last one before the reappraisal, at $1.5540 per $100.
The City of Knoxville rate
Parcels inside city limits pay a second levy. On September 15, 2026, Knoxville City Council passed an emergency ordinance setting the city’s certified rate at $1.3956 per $100 of assessed value, down from $2.1556, for the tax period running July 1, 2026 through June 30, 2027, as WATE reported on the vote. The $2.1556 rate, which the city had kept unchanged in the budget it adopted in May 2026, was still listed on the city’s finance pages as of this writing, so owners using older calculators should swap in the new figure.
Combined, a commercial parcel inside Knoxville pays $2.4114 per $100 of assessed value for fiscal 2026-27. Because assessed value is 40% of appraised value for apartments, that works out to an effective rate of a little under 0.97% of appraised value per year. A parcel in unincorporated Knox County pays only the county line.
The 2026 reappraisal and the certified tax rate
Tennessee law requires every county to revalue real property at least every six years. Knox County had been on a four-year cycle, with reappraisals in 2022 and 2026. In early 2025 the Knox County Commission voted to move to a two-year cycle after a presentation by Comptroller Jason Mumpower, and the Property Assessor’s office now describes a schedule in which the first year is spent on field inspections and sales data and the second year on valuation models and notices.
The 2026 round produced large jumps. Jim Weaver, chief deputy in the Knox County Property Assessor’s Office, said property values across Knox County and the city rose about 60% overall since the 2022 reappraisal. Notices went out in May 2026, and local stations reported owners whose values had nearly doubled.
The certified tax rate is the mechanism that keeps a reappraisal from becoming an automatic tax increase. The Comptroller describes it as a “truth-in-taxation” rule: after a reappraisal, each county and city calculates a rate that raises the same total revenue as the year before, excluding new construction, and the State Board of Equalization reviews the calculation. A local government that wants more than that must publish notice and hold a public hearing before adopting a higher rate. Both Knox County and the City of Knoxville adopted their certified rates for 2026-27 rather than exceeding them.
Revenue neutrality applies to the jurisdiction, not to each parcel. A building whose value rose by about the countywide average should see a bill close to last year’s. A building that gained more than the average pays more, and one that gained less pays less. Weaver put it plainly in the WATE interview: if a property’s value did not rise by more than about 60%, the owner is probably looking at no difference in taxes.
How the assessor values an apartment building
Tennessee’s valuation standard, in Tenn. Code Ann. § 67-5-601(a), is the property’s “sound, intrinsic and immediate value” for purposes of a sale between a willing buyer and a willing seller, without speculative values. For houses, the evidence is mostly comparable sales. For rental property, the income approach carries much more weight, and State Board of Equalization administrative judges have repeatedly noted that general appraisal practice calls for the sales comparison, cost and income approaches to be used whenever possible. One such decision involved a 183-unit midrise apartment complex in Nashville.
In an income approach, the appraiser estimates what the property should earn and converts that income into value. The basic steps look like this:
- Estimate potential gross income from market rents for the unit mix, plus other income such as parking, pet fees and laundry.
- Subtract an allowance for vacancy and collection loss to reach effective gross income.
- Subtract stabilized operating expenses such as management, repairs, insurance, utilities paid by the owner and reserves to reach net operating income.
- Divide net operating income by a capitalization rate drawn from market data to estimate value.
Two details matter when an owner reviews the assessor’s work. The first is whether the cap rate is “loaded.” Because property tax is itself an operating expense, appraisers often leave it out of expenses and instead add the effective tax rate to the cap rate. State Board decisions show both sides arguing over this point. The second is that the assessor generally uses market rents and typical expenses, not the owner’s actual books, unless the owner shows that the actual figures reflect the market. A rent roll that explains underperformance, such as deferred maintenance or a below-market regulatory agreement, is useful evidence.
A worked example for a hypothetical Knoxville building
To make the rates concrete, take a hypothetical 24-unit building inside Knoxville city limits with an appraised value of $3,000,000 on the 2026 roll. The value is invented for illustration. The rates and ratios are the ones adopted for fiscal 2026-27.
- Appraised value: $3,000,000
- Assessed value at the 40% commercial ratio: $1,200,000, or 12,000 units of $100
- Knox County tax at $1.0158: 12,000 x 1.0158 = $12,189.60
- City of Knoxville tax at $1.3956: 12,000 x 1.3956 = $16,747.20
- Combined annual real property tax: $28,936.80, or about $1,206 per unit
Two variations show where the money is. If the same building were wrongly carried at the 25% residential ratio, its assessed value would be $750,000 and the combined bill would be $18,085.50. Second, every $100,000 of appraised value on an apartment parcel inside the city adds $40,000 of assessed value and $964.56 of annual tax at the 2026-27 rates. That figure is a handy yardstick when deciding whether an appeal is worth the cost of an appraisal.
The City of Knoxville offers a 1% discount on real estate taxes paid in full by October 31. On the hypothetical building, that would trim $167.47 from the city portion. The discount does not apply to personal property taxes.
When Knox County and the city send tax bills
Knoxville owners pay two collectors. County taxes go to the Knox County Trustee, which takes payment online, by phone, by mail or at its offices, including Suite 427 of the City County Building at 400 Main Street. City taxes go to the City of Knoxville’s Property Tax Office in Suite 453 of the same building, or by mail or online.
The key dates on the assessor’s calendar and the city’s property tax page line up:
- January 1: the assessment date. Ownership, use and condition as of this date control the year’s assessment.
- May 20: assessments are complete and change notices are mailed.
- October 1: the current year’s taxes become due and payable.
- October 31: last day for the city’s 1% real estate discount.
- February 28: last day to pay the prior year’s taxes without penalty.
- March 1: taxes become delinquent. The city charges penalty and interest of 1% each per month from March 1.
Appealing an apartment assessment in Knox County
Tennessee uses a three-step ladder. In a reappraisal year, the Knox County Property Assessor first offers an informal review. For 2026 the assessor took informal appeals for commercial and industrial property, which includes apartments, separately from residential parcels, and mailed results by mid-to-late June. Informal review is not a formal appeal. The Comptroller warns that an owner who wants to preserve further rights must take the case to the County Board of Equalization, which in 2026 met in July.
Owners still unhappy after the county board can go to the State Board of Equalization. According to the State Board of Equalization’s appeal rules, an appeal from the county board must be filed by August 1 of the tax year or within 45 days of the date notice of the county board’s action was sent, whichever is later. A hearing goes before an administrative judge, who issues an initial decision within 90 days, and a final state board decision can be taken to chancery court within 60 days.
Several rules are specific to commercial property or easy to miss:
- With the assessor’s written consent, industrial and commercial property can be appealed directly to the State Board, skipping the county board, under Tenn. Code Ann. § 67-5-1412(b).
- The owner carries the burden of proof by a preponderance of the evidence. A large increase after a countywide reappraisal is not, by itself, evidence that the assessment is wrong.
- Owners must pay at least the undisputed portion of the tax before the delinquency date to avoid penalties while the appeal is pending.
- March 1 is the last day to request a reasonable cause hearing before the State Board for the prior tax year.
For an apartment building, the strongest appeal usually rebuilds the income approach with documented market rents, a defensible vacancy allowance, stabilized expenses and cap rate support, rather than arguing that the increase was too steep.
PILOT agreements and workforce housing in Knoxville
For new construction, the bigger tax variable is often a payment-in-lieu-of-taxes agreement. Under a PILOT, the property is held in a way that removes it from the regular tax roll, and the developer pays a negotiated amount instead, usually tied to the taxes the site paid before development, for a fixed term. In Knoxville these agreements run through the Industrial Development Board with City Council approval, and city officials have said projects must sit within designated redevelopment areas.
Recent deals show how the city now uses the tool to buy affordability. In November 2024, City Council approved a PILOT for the 297-unit Hill and Locust high-rise downtown, a project estimated at $135 million, with 30 units held for workforce households at 80% of area median income. On August 18, 2026, Council authorized the Industrial Development Board to negotiate a PILOT with WP South Acquisitions LLC for a $98.5 million, 335-apartment community at Patton and Georgia streets in the Magnolia Avenue Warehouse District, with one-tenth of the units set aside as affordable workforce housing and the project validated by an independent third-party review.
Rebekah Jane Justice, the city’s chief of urban design and development, told Council in 2024 that PILOT terms that once ran 20 to 25 years now last 10 years or less, with a published list of priorities that includes workforce housing. For a passive investor looking at a newer Knoxville property, the practical question is when the PILOT expires. A PILOT payment is usually a small fraction of the tax bill the same building would owe at full assessment, so the step-up when the agreement ends belongs in any underwriting of the property.
Tennessee’s wider tax picture for rental owners
Property tax looms larger in Tennessee because the state takes little else from individuals. Tennessee does not tax wages, and the Hall income tax on interest and dividends was fully repealed for tax years beginning January 1, 2021. For an apartment owner living in the state, that leaves property tax as the main recurring tax tied to the asset, and it explains why county and city budgets lean on it. For a side-by-side view of how other states handle these questions, see our state-by-state guide to rent control and property taxes.
Practical steps for Knoxville apartment owners this year
A few habits keep the bill predictable and the appeal rights intact:
- Check the classification line on every assessment notice. Any building with two or more rental units belongs in the 40% class, and an error in either direction can be corrected.
- Recalculate your 2026-27 bill with the new rates: $1.0158 for the county and $1.3956 for the city, per $100 of assessed value.
- Keep a clean trailing operating statement and rent roll for the January 1 assessment date. That is the core of any income-approach appeal.
- Calendar the two-year reappraisal cycle and the June and July review windows, which close quickly in a reappraisal year.
- File the Personal Property Schedule each spring for furnishings and appliances you provide.
- Pay the city bill by October 31 for the 1% discount, and pay both bills by February 28 to avoid penalties.
- For newer properties, confirm whether a PILOT is in place and the year it ends before relying on current tax figures.
For local context on the Knoxville rental market, see our Knoxville market page, and for statewide notes on Tennessee, our Tennessee market overview.
