Tennessee Board Reclassified Rental Homes as Residential
A new state ruling confirms that single-family rentals should be taxed as residential property rather than commercial.
Updated on Oct. 5, 2026 in Apartments
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The Tennessee State Board of Equalization ruled that two rental properties in Rutherford County qualify as residential rather than commercial property for the 2024 tax year. This decision clarifies that property classification depends on how the space is used by the occupant.
Why it matters
Property tax classifications can significantly impact the amount an owner pays annually. By clarifying that single-family dwellings used for residential purposes remain residential regardless of the owner's income goals, this ruling sets a precedent for local tax assessments.
The Tennessee State Board of Equalization Administrative Procedures Division reclassified two rental units for the 2024 tax year. These properties were previously listed as commercial by the Rutherford County Assessor.
The players
Tennessee State Board of Equalization
This state-level authority oversees property tax assessments and resolves disputes between taxpayers and county assessors.
Rutherford County Assessor
This local office is responsible for determining the tax classification of properties within Rutherford County.
The details
The administrative judge determined that the classification of a rental property hinges on how the occupant uses the space rather than the owner's income-generating purpose. Under Tenn. Code Ann. § 67-5-501(11), properties containing only one rental dwelling unit meet the legal requirements to be designated as residential. This ruling requires the assessor to look past the business intent of the property owner and focus strictly on the residential function of the unit.
Timeline
The ruling applies specifically to the 2024 tax year.
The Home Front
This decision clarifies the application of Tenn. Code Ann. § 67-5-501(11) regarding how rental properties are taxed. It reinforces the principle that the physical usage of a home by a tenant takes precedence over the commercial intent of the owner in state property assessments.
If you own a single-family rental, verify how your property is classified on your local tax assessment notice. If you believe your property is incorrectly labeled as commercial, contact your county assessor to discuss the classification in light of this board ruling.
The takeaway
The primary takeaway for property owners is that residential use is the key factor in your tax designation. Review your property tax record to ensure your rental unit is correctly classified as residential according to state guidelines.
Further reading
Learn more about local housing regulations and rental management in Tennessee Apartments.
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