Chapter 831 Deferral

Eligibility for Deferral .  Pursuant to T.C.A. § 7-64-101, the legislative body of any county or municipality may provide by resolution that any single person age 65 years of age or older, or any married couple of which both are 65 years of age or older, or any person who is totally and permanently disabled, who owns real property, and who uses and occupies the property as a place of residence, may apply to the county trustee of the county where the residence is located for a deferral of payment of all real property taxes on that residence. The deferral of property taxes is not available to single persons age 65 years of age or older, or to married couples of which both are 65 years of age or older or to any family group which has more than one person residing permanently in the principal residence, whose combined gross income, as defined by the Internal Revenue Code, is greater than $12,000 a year.¹

Limitations .  The tax deferral provided for in T.C.A. § 7-64-101 applies to no more than $60,000 of the appraised fair market value, as determined from the records of the county tax assessor.  In addition, the tax deferral applies only to the principal residence and no more than one acre of land.²

Application Process .  Applications for the deferral of real property taxes is made annually, on or before March 1 of each year, unless a later date for applications is provided for by resolution of the legislative body of the county or municipality authorizing the program.  Applications received by the county trustee after this date will be considered for deferral of real property taxes for the following tax year. Application forms are prepared by the state Division of Property Assessments. Pursuant to the statute, a $5.00 application fee is imposed to defray the expenses of processing of the application. The fee must be paid when the application is submitted. The county trustee or appropriate municipal official furnishes the county assessor of property a copy of each application for the deferral of property taxes.  Whenever an application for the deferral of real property taxes is made, the county assessor of the county where the residence is located must, within 90 days, reassess the property claimed for deferral and notify the county trustee or the appropriate municipal official of the amount of the reassessment and value for tax purposes. After the trustee determines that the applicant qualifies for deferral, the trustee will approve the application only after receiving written approval from the holder of a note secured by any mortgage or deed of trust on the residence. The trustee must provide the register of deeds notice of each approved application for the deferral of taxes.³

Lien for Unpaid Taxes .  Whenever a deferral of real property taxes is granted, the assessment of taxes will continue on an annual basis; however, the taxes will not become due and payable until the deferral is terminated. The unpaid balance of assessed real property taxes constitutes a lien against the property, and is subject to interest at the rate of 10 percent a year. The accrued taxes and interest will be a lien of the first priority on the property in the particular local government. The lien will remain in effect until the taxes and interest are paid. The tax deferrals created pursuant to T.C.A. § 7-64-101 et seq. are not subject to the statutory penalties imposed on delinquent taxes, and the lien created in the local government is not subject to any applicable statute of limitation.⁴

Termination of Deferral .  Deferrals on the payment of real property taxes, granted pursuant to T.C.A. § 7-64-101 et seq., will be terminated (1) upon the death of the person to whom the deferral was granted and that person's surviving spouse if the spouse qualifies; or (2) when the residence is sold. When the termination is by death, the taxes and interest become due and payable within 18 months of the termination or the settlement of the estate, whichever occurs first. When the termination occurs as a result of the sale of the property, all unpaid taxes and interest thereon become due and payable within 60 days. A deed for the sale of the property will not be accepted for recordation in the office of the county register of deeds until all taxes and interest have been paid.⁵