Murfreesboro, TN - Rutherford County Property Assessor Rob Mitchell was on WGNS Thursday morning (12/26/2024) and said, "Tennessee is facing an urgent crisis in affordable housing, a crisis that is being deepened by a growing trend among property assessors to reclassify residential rental properties from a 25 per cent residential tax rate to a 40 per cent commercial tax rate."
Mitchell continued, "This shift is driving up rental prices, pushing small mom and pop landlords out of business, and giving large, out-of-town investment companies an unfair advantage in the market. The results are devastating for working-class Tennesseans who are already struggling to find affordable housing. The solution is clear: we need to redefine residential properties as homes for families—period. Only then can we protect the very citizens who make Tennessee a community, not just a marketplace."
This shift in property classifications represents a regressive movement, worsening an already deeply regressive tax system. By eliminating the 25 per cent residential classification, Tennessee risks dismantling the very reason for having it in the first place—to preserve affordable housing for local families and protect small landlords from being driven out by rising costs. What is urgently needed now is legislative action to safeguard the homes of Tennesseans and ensure that residential properties are taxed for what they truly are: homes.
A Regressive Move with Far-Reaching Consequences
In Charles Dickens’ A Christmas Carol, Ebenezer Scrooge is depicted as a miserly businessman who cares little for the suffering of the poor and working class, focused instead on squeezing every penny from those who have the least. Today’s proponents of reclassifying residential rental properties—many of them driven by revenue-maximizing agendas—mirror Scrooge’s indifference to human suffering. They seem more interested in increasing tax revenue than in preserving the affordability of housing for Tennesseans, particularly the working families struggling to make ends meet.
The reclassification of residential rental properties from a 25 per cent residential tax rate to a 40 per cent commercial tax rate has been aggressively pushed by the Tennessee Association of Assessing Officers (TNAAO). Despite concerns from local assessors about the fairness of the policy, many property assessors have been encouraged to comply with the directive, pushing taxes on small, local landlords to unsustainable levels. These increased taxes are passed onto renters, driving up costs for working families who are already stretched thin.
The Impact on Tennesseans: A Modern-Day Scrooge Effect
The consequences of this shift are already being felt by Tennessee’s renters. As landlords pass on the increased property tax burden to tenants, rental prices are skyrocketing, further straining the budgets of low- and moderate-income families. Many renters are being forced out of neighborhoods they once called home, unable to keep up with rising rents. Others are forced to accept substandard housing in areas that offer fewer services, worsening the affordable housing crisis.
For small landlords, the impact is equally devastating. These “mom and pop” landlords are often longtime members of their communities, deeply invested in providing homes to local families. But with skyrocketing property taxes, they are being squeezed out of the market. Unable to absorb the increased costs, many are forced to sell their properties, often to large, out-of-state investment firms. These firms, focused solely on profit, have the financial power to absorb the tax hikes and are more than willing to raise rents to cover their costs. This results in a housing market dominated by faceless corporations with no true connection to the communities they buy into.
The Role of Large Investment Firms: The Scrooge-Like Villains of the Modern Age
Large, out-of-state investment firms (don’t mention their names or they may sue you) have capitalized on the forced reclassification, purchasing properties from small landlords who can no longer afford to keep up with the higher tax burdens. These corporations, with no attachment to Tennessee communities, are solely driven by profit. They have the resources to absorb the increased taxes but have little concern for preserving affordable rents or maintaining community integrity. In many cases, these firms immediately raise rents, making housing even more unaffordable for local tenants. As they grow their portfolio of rental properties, they further squeeze out the local landlords who are the backbone of affordable housing.
These investment firms are modern-day versions of Scrooge. Just as Scrooge saw the poor as a burden to his wealth, these corporations view affordable housing as a commodity to be exploited for maximum profit. They have no interest in nurturing neighborhoods or helping working families—they are interested only in the bottom line. And with each acquisition, they increase rents, reduce the availability of affordable homes, and exacerbate the already dire housing crisis.
A Regressive Policy That Hits the Poor the Hardest
The forced reclassification of residential rental properties as commercial properties is a regressive policy, one that places the heaviest burden on Tennessee’s most vulnerable residents. Property taxes are already one of the most regressive forms of taxation, disproportionately affecting low-income individuals. This new classification drives up the tax burden for small landlords, who in turn pass those costs onto renters, further increasing the cost of housing for working-class Tennesseans.
The 25 per cent residential classification was originally introduced to ensure that residential properties were taxed at a lower rate than commercial properties—recognizing that homes are not meant to generate profit, but to serve as stable, affordable living spaces for families. By eliminating this 25 per cent classification and applying a 40 per cent commercial rate, Tennessee is undermining this distinction and effectively making it harder for families to find affordable homes.
This policy is especially troubling given Tennessee’s already regressive tax system, which hits lower-income families the hardest. By shifting to a higher tax rate for residential properties, the state is punishing the very people it should be protecting—those struggling to pay rent, keep a roof over their families, and stay in their communities.
The Solution: Defining Residential Property as a Home for Families
To address this crisis, we must return to the fundamental purpose of residential property: to serve as a home for a family. Whether owned by a small, local landlord or a large, out-of-state corporation, a property used to house a Tennessee family should be classified as residential—period. The key factor here should be its use as a home, not the size of the entity that owns it.
By defining residential properties based on their purpose—providing homes for families—we can ensure that the tax burden remains fair and affordable. Local families and small landlords will be protected from exorbitant tax increases, while large corporations will no longer be able to manipulate the system to their financial advantage.
A Call for Action
The forced reclassification of residential rental properties represents a regressive policy that disproportionately impacts Tennessee’s working families and small landlords. It drives up rents, forces local landlords out of business, and opens the door for large, profit-driven corporations to dominate the housing market. This regressive movement, much like Ebenezer Scrooge’s miserly ways, serves only to enrich those already at the top while leaving Tennesseans struggling to find affordable housing.
The General Assembly must act now to protect affordable housing by redefining residential property as a home for a family—no matter who owns it. Only by ensuring that homes remain homes, rather than mere commodities, can we begin to restore fairness to Tennessee’s housing market. It’s time for the people of Tennessee to stand up and demand action. Let the General Assembly be the ghost of Christmas Future, showing the way forward before it’s too late for Tennessee families.
