Committee rejects bill to classify timeshares as residential for property tax

The State and Local Government Committee on April 1 defeated House Bill 889, a proposal that would have established a statewide rule classifying timeshare properties as residential except where an occupancy tax is collected.

Sponsor Representative Todd said the amendment to HB 889 would "establish a clear statewide standard for timeshare properties in Tennessee are to be classified as residential property," arguing it merely codified prevailing practice and allowed assessors to apportion value for mixed uses. "This bill simply codifies and clarifies what's already been the law in Tennessee and in the practice," the sponsor said.

Opponents warned the change would hamper assessors and reduce local tax revenue. Will Denami, who identified himself as representing "the assessors of property," urged members to vote no, saying the amendment "would overturn the law" and that a 2023 Court of Appeals decision covered the issue. Denami said the amendment would require assessors to review individual units annually and called that approach "not feasible."

Addison Russell, speaking for the American Resort Development Association, said most owners use timeshares as vacation homes and that the Tennessee Timeshare Act already provides for a single consolidated bill. "Most owners do use them as their vacation home," Russell said, adding the amendment targets units left unsold and rented by developers for commercial treatment.

Sevier County Mayor Larry Waters testified in opposition on behalf of his county and several cities, saying timeshares "operate very similar to hotels and overnight rental properties" and noting that booking and marketing mirror hotel operations. Waters estimated the change would cost Sevier County about $1.1 million and said many timeshare units rely on public infrastructure and transient occupancy.

Committee legal staff reviewed Article II, section 28 of the Tennessee Constitution, explaining residential property is assessed at 25% while commercial property is assessed at 40% and that parcels containing two or more rental units can be treated as commercial. Legal counsel noted the bill’s language excludes units subject to occupancy tax from the residential classification.

On the roll call the clerk announced 7 ayes, 12 nos and 2 present not voting; HB 889 failed to advance out of committee. The committee record shows members questioned the practical burden on assessors and the potential fiscal impact on counties where timeshares are a large portion of lodging inventory.

The committee moved on to other bills on its crowded agenda after the vote.