Tennessee closing costs include a state transfer tax of $0.37 per $100 of the price, owed by the buyer, and a mortgage tax of $0.115 per $100 of the loan after the first $2,000. On a $300,000 purchase with a $270,000 loan, those two taxes total $1,418.20, before lender, title, recording, and agent fees.
What taxes are due when a Tennessee home sells?
The Tennessee Department of Revenue sets the realty transfer tax at $0.37 per $100 and the mortgage tax at $0.115 per $100 of debt, with the first $2,000 of debt exempt. The transfer tax is generally based on the greater of the price paid or the value of the property.
State law says the transfer tax is paid by the grantee, the buyer, and collected by the county register when the deed is recorded. The mortgage tax applies only when the buyer finances.
What does that look like on a real purchase?
- Transfer tax on a $300,000 price: $3,000 times $0.37 equals $1,110.
- Mortgage tax on a $270,000 loan: $268,000 taxable, so $2,680 times $0.115 equals $308.20.
- Total state recordation taxes: $1,418.20.
Lender charges, title insurance, prepaid interest, escrow deposits for taxes and insurance, and recording fees come on top and vary by lender and property.
What do sellers typically pay?
Sellers pay off any mortgage or lien, pay whatever agent compensation they agreed to in the listing agreement, and cover any concessions they agreed to give the buyer. Since the 2024 NAR settlement, sellers can still offer buyer concessions or compensation to a buyer's agent, but it is a negotiated term, not an automatic one.
On the federal side, many sellers can exclude up to $250,000 of gain, or $500,000 for joint filers if they owned and lived in the home for at least two of the five years before the sale. Talk to your tax professional or attorney about your situation.
When will I see the final numbers?
Buyers using a mortgage receive a Closing Disclosure, a five page form, at least three business days before closing. Compare it line by line with your Loan Estimate and ask about any change before you sign.
Is it different on the Virginia side?
Yes. A home in Bristol, Virginia or elsewhere in Southwest Virginia closes under Virginia's recordation and grantor tax rules, not Tennessee's. Ask your closing attorney or settlement agent for an estimate based on the specific property.
Questions
Who pays the transfer tax in Tennessee?
Tennessee law says the realty transfer tax of $0.37 per $100 is paid by the grantee, which is the buyer, and collected by the county register when the deed is recorded. The tax is generally based on the greater of the price paid or the property's value. Your purchase contract spells out the rest of the cost split.
How is the Tennessee mortgage tax calculated?
The mortgage tax is $0.115 per $100 of the loan amount, and the first $2,000 of debt is exempt. On a $270,000 loan, $268,000 is taxable, which works out to $308.20. It applies only when the buyer finances the purchase and is collected when the deed of trust is recorded.
Do sellers owe tax on the profit from a home sale?
Many do not. The IRS lets you exclude up to $250,000 of gain, or $500,000 if married filing jointly, when you owned and lived in the home for at least two of the five years before the sale. Rentals and second homes follow different rules. Talk to your tax professional about your situation.
When will I know my exact closing costs?
If you are financing, your lender must give you the Closing Disclosure at least three business days before closing. It lists your loan terms and every closing cost. Compare it with your Loan Estimate and ask your lender or closing attorney to explain any line that changed.
Deciding whether to sell at all? Read Sell Your Tennessee Home or Keep It? How to Decide.
Weighing a move?