37 Cents per $100, Twice: Tennessee’s Transfer Tax and the LLC Deed Memphis Investors Forget
Most rental investors buying in Memphis and Shelby County, Tennessee underwrite the price, the rate and the rehab. Fewer underwrite the two state taxes collected when the deed and the deed of trust are recorded, and fewer still notice the second transfer tax they can trigger by moving the house into an LLC after closing.
Two taxes, one statute
Tennessee’s recordation tax lives in Tenn. Code Ann. § 67-4-409, and because it is state law, the same rates apply to a closing in Memphis, in Germantown, TN or in Somerville in Fayette County. According to the Tennessee Department of Revenue, the realty transfer tax is 37 cents per $100, generally based on the greater of the consideration paid or the value of the property. The department’s recordation tax manual puts that tax on the grantee, which on a purchase means the buyer.
The second tax is on the loan. Tennessee’s indebtedness tax, usually called the mortgage tax, is 11.5 cents per $100 of indebtedness, and the first $2,000 is exempt. The manual says the borrower pays it and the lender collects and remits it. One more detail matters later: the grantee must state under oath on the face of the deed the actual consideration or value, whichever is greater.
The math on a hypothetical Memphis purchase
Take a hypothetical $180,000 single-family rental in Memphis, bought with 25% down and a $135,000 loan. These are illustrations, not Memphis comps.
Transfer tax: $180,000 ÷ 100 × $0.37 = $666. Mortgage tax: ($135,000 − $2,000) ÷ 100 × $0.115 = $152.95. Together that is $818.95 before a single recording fee. The Shelby County Register of Deeds fee schedule charges $12 for warranty deeds and trust deeds up to two pages and $5 for each additional page, and it notes an additional fee on each taxable document. A 20-page deed of trust would run $12 plus 18 pages at $5, or $102, before that extra fee.
None of it is large next to the purchase price. It is still cash due at closing that many first-pass spreadsheets leave out, and on a thin deal it comes straight out of the reserve you meant for the first turn.
The transfer tax does not ask whether money changed hands. It taxes the greater of the price or the value.
The LLC deed: where the tax shows up a second time
A pattern that comes up constantly in investor forums: buy in your personal name to get conventional financing, then deed the house into an LLC for liability reasons. In Tennessee that second deed is its own transfer. The department’s manual lists the transfers that are not subject to tax, including leaseholds, divorce decrees, testamentary devises and transfers to or from a revocable living trust created by the same transferor or a spouse. The list contains no exemption for a transfer into an LLC the transferor owns.
Because the base is the greater of consideration or value, writing “$10 and other good and valuable consideration” on a quitclaim does not make the tax disappear. On the same hypothetical $180,000 house, deeding it into your own LLC could mean another $666, and the two deeds together put the total transfer tax at $1,332. Separately, many residential mortgages contain a due-on-sale clause, so talk to your lender before you record anything that moves title.
The cheaper sequence is usually to decide the vesting entity before closing. If your lender will lend to the LLC, buying in the LLC’s name pays the transfer tax once. If an LLC is the plan anyway, our earlier pieces on Tennessee’s franchise and excise tax and the four-unit line and the end of BOI reporting for rental LLCs cover the rest of the entity math.
Assumptions and loan increases
With rates where they are, the mortgage tax is getting a second look too. Freddie Mac’s Primary Mortgage Market Survey released November 12, 2026 put the national 30-year fixed rate at 7.11%, down from 7.18% the prior week and up from 6.24% a year earlier, per the Associated Press. That is an owner-occupied benchmark; investor loans price above it, usually with a larger down payment.
The manual draws two useful lines. When a buyer assumes the seller’s loan and it is a continuation of existing debt, with the seller still liable, the assumption is not taxed; a new contract with the lender creating new debt is. And when indebtedness increases beyond a previously stated maximum, additional tax is due only on the increase, without the $2,000 exclusion. The manual does not address refinancing by name, so ask your closing attorney how it applies to your loan, and whether a given loan can be assumed by an investor at all is a question for the lender.
Before you sign in Shelby or Fayette County
Budget it. Add 0.37% of the price and roughly 0.115% of the loan to your closing costs. Choose vesting first. Decide personal name, trust or LLC before closing, not after. Do not assume a quitclaim is free. Value, not the stated price, can set the tax. Ask the closing attorney. Exemptions are narrow and fact-specific. Recording costs are only part of ownership cost; our piece on Memphis versus unincorporated Shelby County property tax covers the bill that comes every year. This is general information, not legal or tax advice.
Disclosure: alongside managing property, Matt Mitchell is a licensed REALTOR® with Reid Realtors, LLC. If you buy or sell through him, he is paid a commission on that transaction in addition to any management fee. You are never required to use both services.
Our team manages rentals across Memphis, Germantown, TN and Collierville, TN, and we will run a rent projection on a house before you buy it. Our management fee never exceeds 10% of monthly rent, with no hidden charges.
Sources & further reading: Tennessee Department of Revenue, REC-1 Recordation Tax Overview; Tennessee Department of Revenue, Realty Transfer and Recordation Tax Manual (March 2023); Shelby County Register of Deeds, Fee Schedule; Freddie Mac PMMS; Associated Press via KSAT, November 12, 2026. The $180,000 price, $135,000 loan and 20-page deed of trust are hypothetical illustrations.