What it costs to sell a house in Tennessee

Selling a Tennessee house costs the commission you agree to, your share of closing fees, any repairs or credits the buyer negotiates, and the mortgage, taxes, insurance and utilities you keep paying until closing. The state transfer tax is 37 cents per $100 of the price, and the statute puts it on the buyer unless your contract moves it to you. Add the lines up against the price before you pick a route.

Commission

The commission is whatever you and the listing broker sign in the listing agreement. Read three things in it: the rate or flat fee, whether that fee also pays a buyer’s agent, and whether you owe it if you find the buyer yourself. Get any answer you are told out loud put in writing before you sign.

Our cash offer vs listing calculator lets you enter your own rate and see it next to the other costs, so you are not guessing at a number someone else picked.

Transfer tax, and who pays it

Tennessee taxes the recording of a deed at 37 cents per $100 of the consideration or the property’s value, whichever is greater (§ 67-4-409). On a $200,000 sale that comes to $740. The statute makes the grantee, meaning the buyer, liable for it. A purchase contract can still shift the cost to the seller, so read the closing costs paragraph before you sign.

When the buyer borrows, recording the deed of trust carries a separate tax of 11.5 cents per $100 of the loan above the first $2,000. That one rides on the buyer’s financing, and a cash purchase has no loan to tax.

Title and closing fees

A title company or closing attorney searches the title, prepares or reviews the deed, collects the loan payoffs, and runs the closing. Title insurance, the search, the deed preparation and the settlement fee are separate charges, and the purchase contract says who pays each one. Ask for a written estimate of your side before you accept an offer. Two offers at the same price can leave you with different amounts once those lines are split.

Property taxes at closing

Tennessee property tax is payable the first Monday in October (§ 67-1-701), so a spring or summer closing lands before that year’s taxes are payable. Your contract decides how the year splits between you and the buyer. Read the proration line so you know how many months of the year you are paying for.

Unpaid taxes from earlier years come out of your proceeds at closing, and they grow at 1.5% a month from the March 1 after they came due (§ 67-5-2010). Once the county has sued over them, court costs come too. Our post on delinquent property taxes walks through that process.

Repairs and credits

If the buyer orders an inspection, expect a repair request. You can fix the items, give a credit at closing, cut the price, or refuse and risk the buyer leaving. None of that shows in the list price, and all of it comes out of what you keep. A lender’s appraisal can add its own list if the house falls short of the loan’s standards.

Selling without repairs does not remove your duty to disclose. Our post on selling a house as-is in Tennessee covers what you still have to tell a buyer.

Carrying costs until closing

Every month between deciding to sell and closing, you pay the mortgage interest, property tax, homeowner’s insurance, utilities and upkeep. On an empty house that is money spent on a place nobody uses. What an empty house costs adds those lines up by the month. The cash offer vs listing calculator multiplies them by the number of months you expect the sale to take.

Tax on the gain

The federal exclusion covers up to $250,000 of gain, or $500,000 on a joint return, when you owned the home and lived in it for at least two of the five years before the sale, and you did not exclude the gain on another home in the two years before (IRS Topic 701). A rental, or an inherited house you never lived in, will not meet the use test. Inherited houses have their own basis rule; our inherited house tax calculator applies it.

On the state side, Tennessee’s Hall income tax reached interest and dividends, and it was repealed for tax periods beginning January 1, 2021.

Adding it up

Put each line in a column: the price, minus commission, minus your closing fees, minus repairs or credits, minus carrying costs for the months until closing, minus the loan payoff. What remains is your net. Do the same for a cash offer. Ours has no commission and no repair line, and our price sits below what a finished house brings on the open market, so run both columns before you decide. How we calculate an offer shows the subtraction behind our number.

This is general information, not legal or tax advice. Talk to a Tennessee attorney or CPA about your situation.