1031 Exchange in Knoxville MSA
The Knoxville MSA offers exceptional 1031 exchange opportunities with outstanding property taxes (0.39-0.54% vs. 1.02% national), university stability anchored by UT-Knoxville (8,900+ employees), and normalizing market conditions with $325K-$430K median home values in a diverse economy spanning education, healthcare, and advanced manufacturing.
Population
900,000+
Key Industries
University of Tennessee (8,900+ employees), Covenant Health (10,000+ workers), Knox County Schools (5,000-9,999 workers)
Table of Contents
Information is for educational purposes only. Consult qualified professionals for specific advice.
Local Tax Considerations
Property taxes, transfer taxes, and local incentives
Property Tax Rates
Average Rate
0.35% - 0.60%
Assessment Method
Assessed Value (Tennessee Property Tax Code)
MSA rate (0.39-0.54%) vs State average (0.58%)
Competitive with state average, exceptional vs. national
Transfer Taxes & Fees
Transfer Tax Rate
No state transfer tax
Tennessee has no state transfer tax; local recording fees and documentary stamps apply
Local Tax Incentives
Tennessee Enterprise Zone Program
Tax incentives for business development and job creation
Eligibility: Qualifying commercial and industrial developments
University Research Incentives
Incentives for research and technology development
Eligibility: Companies partnering with UT research programs
Advanced Manufacturing Incentives
State and local incentives for manufacturing expansion
Eligibility: Manufacturing companies creating jobs
Opportunity Zones
Number of Zones
8
Key Locations
- East Knoxville
- Mechanicsville
- Lonsdale
Opportunity Zones offer significant tax benefits for long-term investments, including deferral and potential elimination of capital gains taxes.
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Market Profile Dashboard
Economic indicators and market trends
Population
900,000+
Growth: +1.8% annually
Median Income
$61,147
Unemployment
3.2%
Job Growth
+2.4% annually
Economic Drivers
Market Trends
Median Home Price
$325,000 - $430,000
Average Rent
$1,485/mo
Cap Rates
7.0% - 9.0%
Demographics
Median Age
33.3 years
Bachelor's Degree+
35.6%
Owner Occupied
68.4%
Property Type Analysis
Investment opportunities by asset class
Multifamily
Strong demand from university students, healthcare workers, and young professionals in normalizing market.
Market Metrics
- Cap Rates: 8.5%
- Vacancy Trends: Low vacancy at 7.2% with university and healthcare employment
- Demand Forecast: Excellent fundamentals with university anchor and diverse employment
Risk Factors
- Student housing seasonality
- Market normalization
Opportunities
- University employment stability
- Healthcare worker demand
- Young demographics (33.3 median age)
Single-Family Rental
Popular with university faculty, healthcare professionals, and families seeking quality housing.
Market Metrics
- Cap Rates: 8.8%
- Vacancy Trends: Very low vacancy at 5.4% with professional employment base
- Demand Forecast: Strong fundamentals with university and healthcare anchors
Risk Factors
- High owner-occupancy rate (68.4%)
- Professional income requirements
Opportunities
- University faculty housing demand
- Healthcare professional market
- Exceptional property tax advantages
Neighborhood Spotlights
Up-and-coming areas and investment hotspots
West Knoxville
Upscale area near UT campus with professional and university housing demand
Investment Thesis
University proximity, professional employment, and upscale housing market supporting premium rental rates and consistent demand from faculty, staff, and graduate students.
Median Price
$485,000
Price Growth
+5.8% YoY
Rental Yield
7.2%
Days on Market
35 days
Key Highlights
Development Pipeline
University expansion and upscale residential development
South Knoxville
Emerging area with opportunity zone benefits and development potential
Investment Thesis
Opportunity zone advantages, emerging development, and proximity to downtown creating value-add opportunities with tax benefits and appreciation potential.
Median Price
$285,000
Price Growth
+8.4% YoY
Rental Yield
9.8%
Days on Market
42 days
Key Highlights
Development Pipeline
Mixed-use development and residential revitalization
North Knoxville
Established residential area with healthcare and education employment access
Investment Thesis
Healthcare employment proximity, established neighborhoods, and moderate pricing creating stable rental demand from healthcare workers and families.
Median Price
$325,000
Price Growth
+6.2% YoY
Rental Yield
8.5%
Days on Market
38 days
Key Highlights
Development Pipeline
Healthcare facility expansion and residential infill
East Knoxville
Opportunity zone area with revitalization and development incentives
Investment Thesis
Opportunity zone tax benefits, revitalization efforts, and affordable entry points creating long-term appreciation potential with tax advantages.
Median Price
$245,000
Price Growth
+12.5% YoY
Rental Yield
11.2%
Days on Market
48 days
Key Highlights
Development Pipeline
Community revitalization and mixed-income housing
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Compare Markets
See how this MSA stacks up against others
Compare Markets
| Metric | Knoxville (Current) | Nashville | Chattanooga | Johnson City |
|---|---|---|---|---|
| Population | 4.0M | 4.0M | 4.0M | 4.0M |
| Median Property Price | $750K | $750K | $750K | $750K |
| Average Cap Rate | 5.2% | 5.2% | 5.2% | 5.2% |
| Job Growth Rate | 2.1% | 2.1% | 2.1% | 2.1% |
| Rental Yield | 4.8% | 4.8% | 4.8% | 4.8% |
| Days on Market | 25 | 25 | 25 | 25 |
Frequently Asked Questions
Common questions about Knoxville 1031 exchanges
Knoxville offers outstanding fundamentals: exceptional property taxes (0.39-0.54% vs. 1.02% national), university stability anchored by UT-Knoxville (8,900+ employees, 30,000+ students), diverse economy including Covenant Health (10,000+ workers), Y-12 National Security Complex, normalizing market conditions with 7% projected appreciation, and young demographics (median age 33.3) supporting rental demand.
UT provides exceptional stability as a major economic anchor: 8,900+ direct employees plus 30,000+ students creating consistent housing demand, faculty and staff requiring quality housing, graduate student and young professional markets, research partnerships driving economic growth, and Forbes recognition as 'Dream Employer' ensuring long-term institutional stability.
Yes, eight opportunity zones exist including East Knoxville, Mechanicsville, Lonsdale, South Knoxville, Vestal, Burlington, Oakwood-Lincoln Park, and Western Heights. These offer potential tax benefits for qualifying investments, particularly valuable given the university-anchored economic stability and normalizing market conditions with strong appreciation potential.
The economy is anchored by the University of Tennessee (8,900+ employees), Covenant Health (10,000+ workers), Knox County Schools (5,000-9,999 workers), Y-12 National Security Complex (nuclear/defense), Clayton Homes (manufacturing headquarters), Tennessee Valley Authority (energy), Amazon (logistics), and Pilot Company, providing exceptional economic diversity and stability.
Knoxville's exceptional property tax rates (0.39-0.54% vs. 1.02% national) provide significant cash flow advantages: lower carrying costs improving cap rates, reduced operating expenses enhancing profitability, competitive advantage over higher-tax markets, and long-term wealth preservation through reduced tax burden, making it one of the most tax-efficient major markets in the US.