NOOs Reclassified as Commercial

In anticipation of upcoming property reclassifications by local property assessors, the State legislature passed a bill in June 2020 with some crucial changes and notable impacts for STRs.

As expected, non-owner occupied (NOO) STRs are being reclassified as commercial rather than residential for property tax purposes. While residential properties are assessed at 25%, commercial properties are assessed at 40% — so this change is significant. From the chatter we’ve seen in the local online groups, it seems many STR owners have begun receiving notification of this change being applied to your NOO properties.

Last month, the Tennessee Comptroller released some additional guidance to county assessors regarding implementation of the state law in regards to STRs. You can read that statement in full here »

One of our Board members reached out to the Davidson County assessor’s office for further clarity. According to Mr. Randy Ward in the assessor’s office, to qualify for a reclassification of a NOO STR back to residential, the owner must:

  • also have an owner occupied (OO) STR permit on their primary residence,
  • have no more than one rental unit on the NOO property,
  • have an active, valid NOO permit,
  • reside within the NOO property for at least 14 days or 10% of the rented days, whichever is greater, and
  • file a notarized affidavit that affirms the above, annually.

The OO requirement is not mentioned in either the State law or the Comptroller’s statement, however, so there is obviously a lack of clarity on the matter among those who will be enforcing this change.

We would strongly recommend you reach out to the property assessor’s office to confirm and clarify these details in regards to how they may apply to you and your property. If you would like to pursue relevant legal counsel, we recommend the attorneys listed on our Friends of NASTRA page.

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