Tennessee Property Tax Proration

Tennessee bills in arrears — and that decides who credits whom

Tennessee property tax is billed in arrears for the current calendar year. Bills are payable from October 1 through the end of February without penalty and become delinquent on March 1. The practical consequence at a closing is simple: for most of the year, the bill covering the period the seller owned the property has not been issued yet, let alone paid.

So at a typical mid-year closing, the seller credits the buyer for the portion of the year the seller owned the home. The buyer later receives the full annual bill and pays it, already holding the seller’s share. Reverse the direction only when the seller has already paid the year’s bill — then the buyer reimburses the seller for the remainder of the year.

How the split is counted

The convention is that the seller owns the property from January 1 through the day before closing, and the buyer owns it from the closing date through December 31. The annual tax is divided by the number of days in the year to get a daily rate, then multiplied by each side’s day count.

One nuance worth knowing: when a closing happens before the current year’s rate has been set, the proration is generally based on the most recent available bill. If the new rate lands materially higher, the parties may have agreed to re-prorate once the actual bill issues — check whether your contract says so, because absent that language the proration is final even if the real bill differs.

City taxes prorate separately

If the property is inside city limits there are two bills, county and municipal, and each is prorated on its own. Some Tennessee cities also run on a different billing calendar than the county, so do not assume one proration covers both. When you enter an annual figure above, use the combined total if you want the full picture, or run the county and city amounts separately to see each line as it will appear on the settlement statement.

Finally, the contract governs. Everything here describes the customary method, but a purchase agreement can allocate taxes any way the parties agree, and where it does, the contract controls over custom.

Closing in Tennessee? We are a licensed Tennessee title agency — see how we handle Tennessee title insurance and closings, or read how a Tennessee mail-away or RON closing works if you are signing from another state.

Frequently Asked Questions