Tennessee Closing Costs for Investment Property: Full Breakdown (2026)

Tennessee closing costs for investment property average 2–4% of the purchase price — moderate nationally, but with one unique factor: the state charges a transfer tax of $0.37 per $100 of sale price. On a $200K property, that is $740 — less than Florida ($1,400) or Pennsylvania ($4,000), but more than Indiana ($0) or Texas ($0). Combined with Tennessee’s title-company closings (no attorney required), zero state income tax, and 0.56% property tax, total cash at closing is among the most predictable in the US. Here is the full breakdown by line item with worked examples for Memphis and Nashville.

Tennessee Closing Costs: What Makes Them Different

Three factors define Tennessee closing costs:

• Transfer tax ($0.37/$100) — Tennessee charges a state transfer tax on all real estate transfers. On a $155K Memphis SFR: $574. On a $380K Nashville property: $1,406. This is paid by the buyer in most Tennessee transactions, though it is negotiable. Per Tennessee Department of Revenue, the tax applies to the full consideration (sale price).
• Title company closings — Tennessee is a title-company state, not an attorney state. This saves $500–$1,500 compared to states requiring attorney presence (New York, New Jersey, Georgia). Closings are handled by title companies or escrow agents.
• No state income tax impact — Tennessee charges zero state income tax, so there is no withholding or estimated tax payment at closing for out-of-state buyers (unlike California or Oregon which may require withholding).

Calculate your exact costs in the Tennessee closing costs calculator.

Full Breakdown: Tennessee Buyer Closing Costs

Cost Item	Typical Range	Notes
Transfer Tax (state)	$0.37 per $100	Based on sale price. Buyer pays (negotiable)
Loan Origination Fee	0.5–1.0% of loan	Lender fee. Some charge flat fee
Appraisal	$450–$650	Required by lender
Home Inspection	$350–$550	Optional but recommended
Lender Title Policy	$300–$500	Required by lender. Buyer pays
Owner’s Title Policy	$400–$800	Seller typically pays (TN convention)
Survey	$300–$500	Often required, especially rural TN
Recording Fees	$50–$200	County register of deeds
Credit Report	$30–$75	Pulled by lender
Escrow Reserves	2–3 months taxes + insurance	$800–$2,500 depending on property
Prepaid Interest	15–30 days	Daily interest from closing to first payment
Flood Certification	$15–$25	FEMA flood zone check

Worked Example: Memphis SFR at $155,000

Purchase Price:              $155,000
Down Payment (25%):          $38,750
Loan Amount:                 $116,250

CLOSING COSTS:
  Transfer Tax ($0.37/$100): $574
  Loan Origination (0.5%):   $581
  Appraisal:                 $500
  Home Inspection:           $400
  Lender Title Policy:       $340
  Survey:                    $350
  Recording Fees:            $100
  Credit Report:             $50
  Flood Certification:       $20
  Subtotal Closing Costs:    $2,915

PREPAIDS & ESCROW:
  Escrow (3 mo tax + ins):   $874
  Prepaid Interest (15 days): $479
  Homeowner Insurance (1yr):  $2,400
  Subtotal Prepaids:         $3,753

TOTAL CASH AT CLOSING:
  Down Payment:              $38,750
  Closing Costs:             $2,915
  Prepaids & Escrow:         $3,753
  TOTAL:                     $45,418

  Closing Costs as % of Price: 1.9%
  Total Cash Required:        29.3% of purchase price

$45,418 total cash at closing on a $155K Memphis rental. Closing costs ($2,915) are only 1.9% of purchase price. The transfer tax ($574) is the biggest Tennessee-specific line item — compare to Indiana where this would be $0. But Tennessee’s 0% income tax saves far more over the hold period than $574 at closing.

Worked Example: Nashville SFR at $380,000

Purchase Price:              $380,000
Down Payment (25%):          $95,000
Loan Amount:                 $285,000

CLOSING COSTS:
  Transfer Tax ($0.37/$100): $1,406
  Loan Origination (0.5%):   $1,425
  Appraisal:                 $600
  Home Inspection:           $500
  Lender Title Policy:       $450
  Survey:                    $400
  Recording Fees:            $150
  Credit Report:             $50
  Flood Certification:       $20
  Subtotal Closing Costs:    $5,001

PREPAIDS & ESCROW:
  Escrow (3 mo tax + ins):   $1,044
  Prepaid Interest (15 days): $1,175
  Homeowner Insurance (1yr):  $2,200
  Subtotal Prepaids:         $4,419

TOTAL CASH AT CLOSING:
  Down Payment:              $95,000
  Closing Costs:             $5,001
  Prepaids & Escrow:         $4,419
  TOTAL:                     $104,420

  Closing Costs as % of Price: 1.3%
  Total Cash Required:        27.5% of purchase price

$104,420 total for Nashville — $59,002 more than Memphis. The transfer tax jumps from $574 to $1,406 with the higher price. Nashville closing costs as percentage (1.3%) are actually lower than Memphis (1.9%) because fixed costs (appraisal, inspection, survey) spread over a larger purchase price.

Compare both in the Tennessee closing costs calculator. For full investment analysis including closing costs, use the Tennessee rental property calculator.

Tennessee Closing Costs by County

County (Metro)	Recording Fee	Property Tax Rate	Escrow Impact (3 mo)	Transfer Tax on $200K
Shelby (Memphis)	$100	0.71%	$955	$740
Davidson (Nashville)	$150	0.52%	$810	$740
Hamilton (Chattanooga)	$100	0.48%	$740	$740
Knox (Knoxville)	$120	0.50%	$775	$740
Montgomery (Clarksville)	$80	0.55%	$825	$740

Transfer tax is the same statewide ($0.37/$100). The difference between counties is escrow reserves — Shelby County’s higher property tax (0.71%) means $215 more in escrow than Hamilton County (0.48%). Per Tennessee Comptroller, property is assessed at 25% of appraised value for residential, then county tax rates apply.

Seller Closing Costs in Tennessee

Cost Item	Typical Range
Agent Commission	5–6% of sale price ($7,750–$9,300 on $155K)
Owner’s Title Policy	$400–$800 (seller pays by convention)
Transfer Tax	$0.37/$100 (sometimes split buyer/seller)
Recording Fees	$50–$100
Prorated Taxes	Seller pays through closing date
Total Seller Costs	6–7.5% of sale price

For exit analysis including selling costs and capital gains tax (0% state!), use the capital gains tax calculator. Tennessee’s zero income tax means your net proceeds are 3–5% higher than selling in Ohio, Indiana, or Georgia.

How to Reduce Tennessee Closing Costs

1. Negotiate Transfer Tax

While buyer typically pays the transfer tax in Tennessee, it is negotiable. In a buyer’s market (inventory 4.6 months nationally in 2026), sellers may agree to split or pay the full $0.37/$100. On a $200K property: $370 savings if seller pays half.

2. Ask for Seller Credits

Request 2–3% seller credit toward closing costs. On $155K: $3,100–$4,650 — more than covering all closing costs. Seller credits are increasingly common with rising inventory. Per NAR, 26% of sellers offered concessions in Q2 2026.

3. Close Late in the Month

Prepaid interest runs from closing to month-end. Closing on the 28th = 3 days (~$95 on a $116K loan at 7%). Closing on the 1st = 30 days (~$950). $855 difference in cash needed at closing.

4. Shop Lender Fees

Get 3+ Loan Estimates within 14 days. Origination fees range from 0% to 1.0% ($0–$1,163 on a $116K loan). Some lenders offer no-origination with higher rate — compare APR.

5 Tennessee Closing Cost Mistakes

1. Forgetting the Transfer Tax

Tennessee is not a zero-transfer-tax state like Indiana or Texas. $0.37/$100 adds $574 on a $155K property and $1,406 on $380K. Budget for it.

2. Assuming Owner’s Title Is Your Cost

In Tennessee, the seller typically pays the owner’s title policy ($400–$800). The buyer pays only the lender’s policy ($300–$500). Do not double-count both.

3. Ignoring Memphis Flood Insurance

Memphis properties near the Mississippi River or Wolf River may require FEMA flood insurance ($500–$2,000/year) on top of standard hazard insurance. This is escrowed at closing — adding $125–$500 to your cash required. Check the FEMA flood map before underwriting.

4. Using Nashville Closing Costs for Memphis Deals

Fixed costs are similar, but escrow reserves differ because property tax rates vary by county. Shelby County (Memphis) at 0.71% requires higher escrow than Davidson County (Nashville) at 0.52%. A $200K property: $60 more in 3-month escrow for Memphis vs Nashville.

5. Not Comparing Title Companies

Tennessee title insurance rates are not as strictly regulated as Indiana. Rates vary 10–20% between companies. Shop 2–3 title companies for the best combination of rate and service.

Frequently Asked Questions

Related Calculators and Guides

• Tennessee Closing Costs Calculator — Estimate buyer costs
• Tennessee Rental Property Calculator — Include closing costs in analysis
• Tennessee Cap Rate Calculator — Property return analysis
• Tennessee DSCR Calculator — Loan qualification
• Tennessee BRRRR Calculator — BRRRR with closing costs
• All Tennessee Calculators
• General Closing Costs Calculator

Other state closing cost guides:

• Indiana Closing Costs
• Ohio Closing Costs
• Georgia Closing Costs
• North Carolina Closing Costs
• Texas Closing Costs
• Florida Closing Costs
• Tennessee Rental Property Guide