Calculating Property Taxes in Memphis, TN on SFR

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Calculating Property Taxes in Memphis, TN on SFR

Mark S.Pro Member
Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes

I am trying to compare the proforma number from a turnkey provide to the actual amount of property taxes that I will likely be responsible for after purchase.  I've been doing some reading and according to an article I came across, Shelby County, TN calculates county and city taxes based on the ASSESSED value, which is 25% of the APPRAISED value.  Is this correct?

According to the Property Tax Calculator on the Shelby County, TN website:

County Tax Rate: 4.11
City Tax Rate (for Memphis): 3.271481

The purchase price of the turnkey property I'm under contract to buy is $84,000.  So, if I understand correctly, the taxes will be calculated as follows:

$84,000 appraised value x 25% = $21,000 assessed value
County Tax: $21,000 assessed value x 4.11% = $863.10/year
City Tax: $21,000 assessed value x 3.271481% = $687.01/year
Total Taxes = $863.10 + $687.01 = $1,550.11/year or $129.17/month (compared to proforma $95/month)

Is this correct?

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Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
9y

@Mark S.  You are correct in what you put down but the taxes are not based on what you purchase the home for or what it appraises for when you get your loan in place. The home currently has a tax assessed value attached to it, that is the number you would use.  There is a good chance that this value might be lower then your current purchase price of $84,000 which is what the seller of the home used in their proforma.  If you go to the Shelby County Tax Assessor site, enter in the address and pull the info for the home you are buying it will tell you what the Tax Assessed Value is, that is the number to use for your calculation.

Hope that helps.

Curt Davis - KAIZEN Realty538 Reviews
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  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    9y

    @Mark S.  You are correct in what you put down but the taxes are not based on what you purchase the home for or what it appraises for when you get your loan in place. The home currently has a tax assessed value attached to it, that is the number you would use.  There is a good chance that this value might be lower then your current purchase price of $84,000 which is what the seller of the home used in their proforma.  If you go to the Shelby County Tax Assessor site, enter in the address and pull the info for the home you are buying it will tell you what the Tax Assessed Value is, that is the number to use for your calculation.

    Hope that helps.

    Curt Davis - KAIZEN Realty538 Reviews
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  • Henry J.
    Monterey Park, CA · Member since 2014 · 157 posts · 80 votes
    9y
    Mark S. add on to what Curt wrote - be mindful that tax assessor has been reassessing property value so what you will pay next year may be different from your current estimate. I don't know for sure of the frequency but it seems to be yearly - I've received a notice every year since my purchase. Can someone confirm this? Thanks. Henry
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  • Mark S.Pro Member
    OP
    Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
    9y

    @Curt Davis, thank you for the clarification.  My only fear is that the assessed value, in this case $4,850 on the PVA website, seems extraordinarily low.  Using this in the above formulas, I get $29.83/month combined on property taxes.  If this is the case, why would the turnkey provider use $95/month?  Wouldn't they want their numbers to seem even more favorable?   

    @Henry J., thanks for contributing.  It seems like my above point plays directly into your question.  It may be $29.83/month now but could be significantly more next year. 

    How does one plan for this?  I'm trying to use some reasonable numbers to have accurate cash flow projections and it seems like the figures are all over the place.  My monthly cash flow will probably be pretty lean as it is, and the last thing I want is to grossly underestimate property taxes only to have those eat up my cashflow.

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  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    9y

    mark send me a pm with the address and then I can reply with a screen shot for you. Thx 

    Curt Davis - KAIZEN Realty538 Reviews
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  • Mark S.Pro Member
    OP
    Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
    9y

    @Curt Davis  Sent.

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