Most states tax a home sale once, if at all. Tennessee taxes it twice, in two different places, on two different numbers.
The first lands on the deed: a realty transfer tax of $0.37 per $100 of sale price. The second lands on the debt: a recordation tax, usually called the indebtedness tax, of $0.115 per $100 you actually borrow. One taxes the house changing hands, the other the loan being written down and filed, and you can owe both on the same afternoon.
That sounds worse than it is. On Tennessee's median sale price of $383,600 with 20% down, the transfer tax is $1,419 and the indebtedness tax on the $306,880 loan is about $353. Together, $1,772 — roughly 13% of a midpoint closing-cost bill of $13,426.
They're worth understanding separately, because one scales with what you pay for the house and the other with how much you borrow. For every other fee, our line-by-line breakdown of what closing costs actually cover does the general work; this page stays on what's specific to Tennessee.
A note before you start: this is general education, not financial, legal, or tax advice. Every figure below is a statewide number from CalculatorByState's sourced dataset, and your county, lender, title company, and contract will all move the total. Recording offices differ, lender fee schedules differ, and what a seller agrees to cover differs deal by deal. Your Loan Estimate and Closing Disclosure are the authoritative documents. Use this to sanity-check them, not to replace them.
1. What closing costs actually run in Tennessee
A 2-5% range against Tennessee's $383,600 median sale price gives you roughly $7,672 to $19,180, with a midpoint near $13,426. Drop the price to $350,000 and the same range becomes about $7,000 to $17,500.
A narrower sourced average for Tennessee buyers is 3.63% of the purchase price, or about $13,925 at $383,600 — close enough to the midpoint that the midpoint is a fair planning number. Neither figure includes agent commissions.
Closing costs are separate from your down payment, and both are due the same day. On a $383,600 purchase with 20% down, you finance $306,880 and put down $76,720; add the $13,426 midpoint and you need about $90,146 in cash. That total, not the down payment alone, catches buyers off guard.
See your all-in Tennessee closing costs2. Tennessee's realty transfer tax
This is the tax on the sale itself, assessed on the deed's value or consideration and collected when the deed is recorded. The rate is $0.37 per $100, or 0.37% of the sale price. It's statewide and uniform — no county add-ons, no rate that changes when you cross a city line.
At Tennessee prices:
- $350,000 sale: $1,295
- $383,600 median sale: $1,419
Easy to compute in advance, so you can put it into an offer deliberately rather than discover it at signing. The amount is non-negotiable; only which side of the table pays it is open for discussion, covered in section 5.
3. Tennessee also taxes your loan
Here's the part most buyers haven't heard of. Tennessee imposes a recordation tax on indebtedness — mortgages, deeds of trust, and other instruments that evidence new debt — at $0.115 per $100 of indebtedness, with the first $2,000 exempt.
This is not the transfer tax under another name. The transfer tax hits the deed and scales with the purchase price; the indebtedness tax hits the recorded mortgage and scales with the loan amount.
On the $306,880 loan behind a 20%-down purchase at the median:
- $306,880 ÷ 100 = 3,068.8 hundreds
- 3,068.8 × $0.115 = $353
- The $2,000 exemption trims about $2 off that ($2,000 ÷ 100 × $0.115 = $2.30)
So call it $351 to $353. Small — but notice what it's tied to. Put 10% down instead of 20% and you borrow more, record more, and owe more; put 30% down and you owe less. It's one of the very few Tennessee closing-cost items that responds directly to your down payment.
The flip side is refinancing. A refinance has no sale or deed transfer, so no realty transfer tax at all — but you are recording a new instrument of indebtedness, so the $0.115 per $100 applies again to the new loan. At today's rates of 6.65% on a 30-year fixed and 5.95% on a 15-year, that's a modest but real line in any Tennessee refinance break-even math.
4. Who closes your loan in Tennessee
Tennessee is not an attorney-closing state. It isn't among the roughly twenty states requiring attorney supervision of a residential closing; title and escrow companies handle closings statewide, and yours will most likely happen at a title company's table with an escrow officer running the documents.
Hiring an attorney anyway is allowed and still common on complicated deals — typically $500 to $1,500 on top of the settlement fee. Worth it on an estate sale, a boundary problem, or a purchase from a builder whose contract you didn't write; usually skipped on a clean resale.
Either way you get the escrow function and title insurance. Read what title insurance actually protects and who it protects rather than assuming it covers you the way homeowner's insurance does. It doesn't.
5. Who pays what, and what's negotiable
Tennessee custom puts the realty transfer tax on the buyer, unlike the many states where it's split or falls on the seller by default. The statute lets either party pay; local practice has the buyer absorbing it.
"Custom" is doing real work there — it's a default, not a rule. In a slow market, asking the seller to cover the $1,419 transfer tax is an ordinary request, and cleaner than a price reduction because it doesn't touch the appraisal. On a contested listing, carrying it is a concession that costs you a known amount rather than an open-ended one.
The indebtedness tax is different: it's tied to your loan, so it sits on your side of the sheet and stays there.
Everything else follows the national pattern: lender charges have room, shoppable services can be shopped, and government fees and prepaids are what they are. Which closing fees you can actually push back on sorts them into those buckets.
6. How to lower the bill before you sign
- Decide who pays the transfer tax in writing. At the median that's $1,419, and Tennessee custom hands it to you by default. If you want it otherwise, put it in the contract, not a conversation.
- Remember the indebtedness tax moves with your loan. A larger down payment shrinks it — small, but one more item favoring borrowing less.
- Shop lenders, not just rates. Origination and underwriting charges vary between lenders on identical loans, and are the largest genuinely negotiable block on the sheet.
- Compare your Loan Estimate to your Closing Disclosure line by line. Some figures may move between the two and some may not; how the Loan Estimate tolerances work explains which is which.
And budget prepaids separately. Funding the first year of property taxes and insurance into escrow is cash due at closing, not a fee — how escrow accounts get funded walks through that deposit.
Frequently asked questions
How much are closing costs in Tennessee?
At the statewide median sale price of $383,600, a 2-5% range gives roughly $7,672 to $19,180, with a midpoint near $13,426. A narrower sourced average for Tennessee buyers is 3.63%, or about $13,925 at that price. None of these include agent commissions.
Does Tennessee have a transfer tax?
Yes. Tennessee charges a realty transfer tax of $0.37 per $100 of sale price, or 0.37%. On a $383,600 home that's $1,419; on a $350,000 home it's $1,295. The rate is uniform statewide, with no county or city add-ons.
What is Tennessee's mortgage indebtedness tax?
It's a recordation tax of $0.115 per $100 charged on mortgages, deeds of trust, and other instruments evidencing new debt, with the first $2,000 exempt. On a $306,880 loan it comes to about $353 — separate from the realty transfer tax, and based on your loan amount rather than the purchase price.
Do I really pay two taxes at a Tennessee closing?
If you're buying with a mortgage, yes — one on the deed and one on the recorded loan. At the $383,600 median with 20% down, that's $1,419 plus about $353, or roughly $1,772 combined — about 13% of a $13,426 midpoint bill.
Does the buyer or the seller pay closing costs in Tennessee?
Both sides pay their own, and the transfer tax is customarily the buyer's line here rather than a split. Custom is a default, not a legal requirement, so the contract controls — either party can legally pay it if the deal is written that way.
Do I need an attorney to close on a house in Tennessee?
No. Tennessee doesn't require attorney supervision at a residential closing, and title or escrow companies handle closings across the state. Buyers who want one anyway typically pay $500 to $1,500, which can be well spent on a complicated title or contract.
Does the indebtedness tax apply when I refinance in Tennessee?
Yes, because you're recording a new instrument of indebtedness. There's no realty transfer tax on a refinance since no deed changes hands, but the $0.115 per $100 applies to the new loan amount. Fold it into your break-even calculation alongside lender fees.
Are closing costs part of my down payment?
No — they're separate, and both are due at closing. On a $383,600 Tennessee home with 20% down, you finance $306,880 and bring $76,720 down plus about $13,426 in costs, for roughly $90,146 in cash. Ways to bring less cash to the closing table covers credits, lender-paid options, and what each trades away.
What to do next
Run your target price through Tennessee's payment calculator, which builds in the state's property tax and insurance averages for a full monthly payment rather than principal and interest alone. Then work backward from the cash on hand, treating 0.37% of the price plus 0.115% of your loan as fixed government cost before you negotiate anything else.
- Tennessee mortgage payment calculator
- Tennessee affordability calculator
- Tennessee first-time buyer calculator
- How to buy a home in Tennessee
- First-time home buyer programs explained
Every figure on this site is sourced and dated; see where each comes from on our methodology page.
The figures above are illustrations drawn from CalculatorByState's sourced dataset — statewide numbers, not county-level quotes, and recording offices, lender fee schedules, and title company charges vary across Tennessee. Your own costs depend on your address, lender, loan size, and contract. For advice specific to your situation, consult a licensed real estate professional, mortgage lender, or attorney in Tennessee.