Senate Bill 539 aims to amend the Tennessee Code regarding the assessment of multi-unit rental housing that is subject to government restrictions on use. The bill introduces a new section, 67-5-608, which outlines specific methods for assessing such properties. These methods include applying an annual net operating income approach, utilizing a methodology consistent with the Uniform Standards of Professional Appraisal Practice, adjusting the unrestricted market value based on average annual rents, and excluding low-income housing tax credits from the valuation. Additionally, the bill mandates that the capitalization rate used for these assessments must reflect the risks associated with government-restricted properties and be higher than that for unrestricted properties.

The bill also establishes requirements for property owners, including the obligation to notify property assessors of any changes in the status of government restrictions and to file necessary information for proper assessment. Failure to comply with these notification requirements may result in liability for delinquent property taxes. The act will take effect upon becoming law for the purposes of publishing capitalization rates and creating application forms, while the broader provisions will apply starting January 1, 2026, to properties developed after that date.