Tennessee

Tennessee transfer tax and mortgage tax: rates and who pays

Tennessee charges $0.37 per $100 of price on deeds and $0.115 per $100 on loans (first $2,000 exempt). On a $400,000 Nashville home: $1,480 plus $365.70.

Checked on against the official sources listed at the bottom of the page.

In short

Tennessee taxes both the deed and the loan. The Department of Revenue sets the realty transfer tax at $0.37 per $100 of purchase price and the mortgage (indebtedness) tax at $0.115 per $100 of debt, with the first $2,000 exempt. By law the buyer pays the first and the borrower pays the second. Both are collected by the county Register of Deeds when documents are recorded.

What are the two taxes?

The state calls them together the “recordation tax” (Tenn. Code Ann. § 67-4-409). The Department of Revenue describes it as a tax on two separate privileges:

  • Realty transfer tax, on recording a deed or other instrument that transfers an interest in real property.
  • Mortgage tax, on recording a mortgage, deed of trust or other instrument that evidences a debt.

The county Register of Deeds collects both and sends them to the Department of Revenue. The manual states that the two taxes are separate: a document that transfers property and also evidences a debt can owe both.

How is the transfer tax calculated?

The rate is $0.37 per $100 (0.37%). The tax base for a typical sale is the greater of the price paid or the value of the property at the time of transfer. The Department accepts the local assessor’s tax base or a recent appraisal accepted by the assessor as fair market value, and says anything lower is subject to audit, with penalties and interest.

The person receiving the property must state, under oath on the deed and in front of the register, the actual consideration or value, whichever is greater. A knowingly false statement is punishable as perjury. A true quitclaim deed is taxed on the consideration given, not on market value.

How is the mortgage tax calculated?

The rate is $0.115 per $100 of “indebtedness”, which means principal only; interest and collection costs do not count. The first $2,000 of the debt is not taxed. Every recorded instrument must carry the statement “Maximum principal indebtedness for Tennessee Recording tax purposes is $___.” For a line of credit, the tax is based on the stated maximum, so later draws do not add tax.

Who pays?

TaxWho pays under the Department’s rulesPaid to
Realty transfer taxThe grantee (buyer), as shown on the deedRegister of Deeds of the county where the deed is recorded
Mortgage taxThe mortgagor or debtor (borrower)Register of Deeds, or the Secretary of State for some filings

The register may not record the document until the tax is paid. The manual and the Register’s page do not discuss private agreements on who bears the cost, so check your purchase contract. The Register’s page also lists a $1 probate fee, collected only when state tax is paid.

What is exempt?

The Department’s manual lists transfers that owe no realty transfer tax, including:

  • Leasehold transfers.
  • Transfers between spouses that create or dissolve a tenancy by the entirety, and transfers of property formerly held as tenants in common.
  • Deeds that carry out a will, and deeds under divorce or domestic decrees.
  • Transfers into or out of a revocable living trust by the same owner or spouse.
  • Transfers to a government entity.

A deed of trust assigned to the Tennessee Housing Development Agency (THDA) or to the Federal Housing Administration is exempt; Fannie Mae and Freddie Mac are not. Reverse mortgages under the Tennessee Reverse Mortgage Innovation Act are also exempt from the mortgage tax.

What it costs: a worked example in Nashville

This is an example, not a quote. Assume a $400,000 purchase with a $320,000 loan recorded in Davidson County.

ItemCalculationAmount
Realty transfer tax$400,000 ÷ 100 × $0.37$1,480.00
Mortgage tax($320,000 − $2,000) ÷ 100 × $0.115$365.70
Total state recordation tax$1,845.70
Recording fee, 5-page deed (page count assumed)$5 per page, $10 minimum, plus $2 data-processing fee$27

Recording fees are separate from the tax. The Davidson County Register of Deeds lists $5 per page, a $10 minimum and a $2 data-processing fee for warranty deeds and deeds of trust, under Tenn. Code Ann. § 8-21-1001 (the Register’s page was last updated in August 2021; confirm the current fee before closing). In the Department’s and the Register’s materials I found only the state tax, with no separate Davidson County or Metro Nashville transfer tax. For all closing lines, see Tennessee closing costs and closing costs explained.

Frequently asked questions

Does Tennessee have a transfer tax?

Yes. The Department of Revenue sets the realty transfer tax at $0.37 per $100 of purchase price, collected by the county Register of Deeds at recording.

Who pays the transfer tax in Tennessee?

The Department’s manual says the grantee, the buyer named on the deed, is responsible. Your contract may say something different between the parties, but the register collects it as part of recording.

Is the mortgage tax charged on the whole loan?

No. It is $0.115 per $100 of principal, and the first $2,000 of the debt is exempt. A $320,000 loan owes $365.70.

Can I get a refund of an overpayment?

Only the Department of Revenue can refund realty transfer or mortgage tax. The Davidson County Register says to send copies of the instruments, tax receipts, a short explanation and a Claim of Refund form to the Department.

Is there a county or city transfer tax in Nashville?

The official pages I read list only the state rates. Ask the Register of Deeds at 615-862-6790 before closing. For a property tax overview, see Tennessee property tax and the Nashville page.

Compare with the other states: Real estate transfer tax by state.

More Tennessee guides

Sources

Tennessee · All states · Federal guides