CAPITALIZATION RATE FOR MULTI-UNIT RENTAL HOUSING For residential property and projects developed on or after January 1, 2026, this bill requires multi-unit rental housing that is subject to government restriction on use to be assessed in a manner that is consistent with all of the following methods:  Applying an annual net operating income approach to value that uses actual income and stabilized operating expenses that are based on the actual history of the property, when available, and a capitalization rate.  Using a methodology to project income, expenses, and a capitalization rate that is consistent with the Uniform Standards of Professional Appraisal Practice.  Adjusting the unrestricted market value of the multi-unit rental housing, computed without regard to a government restriction on use applicable to the multi-unit rental housing, based on the ratio of the average annual rent of those units of the property that are subject to government restriction on use to the average annual rent of comparable multi-unit rental housing that is not subject to government restriction on use.  Excluding the amount of low-income housing tax credits received under federal law, or from a state or federal program in determining the value attributable to the multi-unit rental housing. As used in this provision, "low-income" means earning at or below 80% of the area median income as defined by the United States department of housing and urban development for the location of the multi-unit rental housing. As used in this bill, "multi-unit rental housing" means residential property or a project consisting of four or more individual dwelling units and does not include (i) assisted living facilities or (ii) duplexes or single-family units unless they are classified as commercial property or included as part of a larger property that is subject to government restriction on use. This bill requires the capitalization rate projected pursuant to this bill to be:  Based on the risks associated with multi-unit rental housing subject to government restriction on use, including diminished ownership control; income generating potential; liquidity; the condition of the property; the class of the property; and the property's location and size.  Equal to or greater than the capitalization rate used for valuing multi-unit rental housing that is not subject to government restriction on use.  In the range of 50 to 150 basis points above the most recent quarterly survey of the national average capitalization rates of multifamily properties published by realtyrates.com or a successor organization as determined by the division of property assessments in consultation with the Tennessee housing development agency. Beginning with tax year 2026 and each tax year thereafter, this bill requires the division of property assessments to publish the capitalization rate range for property assessors to use for that tax year on its website as soon as practicable after the rates become available. REQUIRED NOTIFICATION FROM THE OWNER This bill requires the owner of multi-unit rental housing to promptly notify the property assessor if any of the following circumstances exist:  The property is subject to government restriction on use, and if so, whether the owner requests that the property be classified as multi-unit rental housing subject to government restriction on use.  The property ceases to be subject to government restriction on use, and if so, whether the owner of the property requests that the property's classification as multi-unit rental housing subject to government restriction on use be withdrawn.  A foreclosure action has been brought upon the property. This bill also requires the owner of multi-unit rental housing to file with the property assessor, on a form prescribed by the state board of equalization, the information necessary for the multi-unit rental housing to be assessed based on the methods described in this bill. Such notification must be in writing and submitted to the property assessor on or before December 31 of each year in which the applicable circumstances listed above occurred. If the owner fails to submit such notification, then the owner is liable for any delinquent property taxes, including interest and penalty, assessed on the property.