Hey helpful people, I know that in some states property tax is higher on a rental property than an owner occupied. Is this the case in Chattanooga? If so, what is the rate? Good to know so as I look at Zillow estimates I can change that numbers accordingly.
Hey there Kelly,
According to the City of Chattanooga's official website "The Tax Rate is set by City Council each year as part of the annual budget process. The current tax rate is 2.2770 per $100 of assessed valuation. Residential and commercial properties are assessed at 25% and 40% of appraised value respectively."
Other than that I haven't seen any specifics on exact rates for rental properties.
When running deals I like to just use the average millage rate for the state. In Chattanooga, the rate is 1/4 Mill per $1000 of assessed value.
Joel, thanks for the quick response. I saw that as well, and was unsure if rental properties counted as commercial properties. Maybe I need to just place a phone call to the county assessor.
Kelly, the property tax rate will be the same regardless of the occupancy type. Doesn't matter if you live in it or rent it out. The tax rate will be the same. However, if you own the rental in a LLC you'll get hit with franchise tax on real property.
@Keith Rocha . Can you expand some on the LLC-franchise tax implications on rental properties in Chatt? I was unaware of that.
@John Bradley its a state of TN tax. LLCs are subject to franchise & excise taxes. The franchise tax is the one that gets you in real estate.
The tax is based on the entity’s net-worth, or the book value of all real estate, and taxed at the rate of 25 cents per $100, and annual minimum tax of $100.
Originally posted by @John Bradley :
@Keith Rocha. Can you expand some on the LLC-franchise tax implications on rental properties in Chatt? I was unaware of that.
Check into the FONCE exemption. If it's family owned, you won't pay the F&E tax. Check with your CPA of course as I am not one.
Thanks y'all. I had no idea of the .25/$100 tax on LLC-owned properties. I don't own anything other than my personal house and my LLC is dormant. Plus...I don't HAVE a CPA!