It taxes every deed and every loan when they are recorded, taxes the LLC that holds the property on its profits, and in Nashville has closed most neighborhoods to new investor-owned short-term rentals. None of that stops a good deal, but all of it belongs in the numbers, whether the money is a hard money loan, a private money loan or a DSCR loan.
Tennessee taxes every recording, so a flip-and-refinance pays twice
Tennessee's recordation tax has two parts, set out in Tennessee Code Section 67-4-409. The realty transfer tax is 37 cents per $100 of the greater of the price or the property's value, due when a deed is recorded. The indebtedness tax, often called the mortgage tax, is 11.5 cents per $100 of the loan, with the first $2,000 exempt, due when the deed of trust is recorded. Some counties add a local amount on top.
For an investor, the second part is the one people forget, because it applies to every loan, not every purchase. Take the most common Tennessee plan: buy with a hard money loan, renovate, then refinance into a long-term DSCR rental loan.
On a $180,000 purchase financed with a $150,000 hard money loan, the transfer tax is about $666 and the mortgage tax about $170. When the renovated house is refinanced into a $220,000 DSCR loan, a new deed of trust is recorded and the mortgage tax is charged again, about $251. If the plan is to sell instead, the next buyer's deed carries its own transfer tax, which usually becomes part of the negotiation. None of these is large on its own, but on a thin flip they add up, and they belong on the budget line for closing costs from the first day.
No income tax on wages, but the LLC still pays
Tennessee does not tax wages. It does tax businesses. Every entity doing business in Tennessee with limited liability for its owners, including LLCs and S corporations, generally owes the state's franchise and excise taxes. The excise tax is 6.5 percent of net earnings apportioned to Tennessee. The franchise tax is 0.25 percent of net worth, with a $100 minimum; since 2024 it is calculated on net worth only, after the legislature repealed the old property measure that taxed the book value of real estate.
That matters because our lending partners lend only to business entities, so almost every Tennessee deal arranged through Dominion Hard Money is held in an LLC or corporation. A profitable flip held in a Tennessee LLC can owe excise tax on the profit even though the owner pays no state income tax personally. Some family-owned entities that hold rental property qualify for an exemption, and the rules turn on the details, so confirm the position with a Tennessee CPA before you set up the entity. This is general information, not tax advice.
Property tax itself is assessed at 25 percent of appraised value for residential property, with the county and city rate applied to that. As in every state, the seller's bill tells you about the seller, not about you after a renovation.
Nashville: prices, inventory, and the short-term rental wall
Nashville is the state's most expensive market, and after the run-up of the early 2020s it has settled into a more balanced one, with more inventory and longer days on market than investors were used to. A flip needs a holding budget to match, and an after-repair value built from recent closed sales on comparable streets.
The rule that catches the most investors is Nashville's short-term rental code. Every short-term rental needs a permit from Metro Codes, and permits come in two kinds: owner-occupied and not owner-occupied. Metro does not issue new not-owner-occupied permits in the AR2A, R, RS or RM zones, which cover most of the city's residential land, including much of the housing in neighborhoods investors love, such as East Nashville, The Nations, Sylvan Park and 12 South. The rule has applied since January 1, 2022. New non-owner-occupied permits are limited to mixed-use, office, commercial and downtown districts, so check the zoning of the exact parcel, since a single street can change districts. An existing permit in the residential zones does not transfer to a buyer.
So a house bought in a residential zone on the strength of its Airbnb income will usually have no Airbnb income once you own it. For a DSCR loan, that means underwriting on long-term rent, not nightly rates. Check the zoning of the exact parcel, and whether a permit can be issued to you, before you count a dollar of short-term income.
Memphis is the other large investor market, with far lower prices than Nashville and a long history of out-of-state rental ownership. The cheapest houses there can fall below a lender's $50,000 minimum loan once you account for the rehab, and neighborhood quality changes block by block, so price the specific street. Knoxville and Chattanooga fall between the two cities on price.
Have a deal on the table?
Send the address, the numbers and your exit. Our lending partner's team reviews it and tells you whether it fits and on what terms. The lender makes every credit decision.
DSCR loans in Tennessee: the rental loan most investors are searching for
More Tennessee investors search for a DSCR loan than for any other kind of investor financing. A DSCR loan qualifies the property, not your paycheck: the lender compares the rent to the payment, including principal, interest, taxes and insurance. That suits self-employed investors and anyone growing a portfolio past what a bank will count.
Our lending partners' DSCR rental program lends from $75,000 to $2 million, up to 80 percent of value on a purchase or rate-and-term refinance, with no minimum credit score. The rate depends on the property's cash flow and the rest of the file, and the lender sets it.
In Tennessee, three things decide whether the DSCR works: long-term market rent (not short-term rent, in most of Nashville), the real property tax at 25 percent of the new value, and a real insurance quote. Remember the mortgage tax on the new deed of trust, too.
Fix and flip loans in Tennessee: how the loan gets sized
Fix and flip, rehab and bridge loans are priced from 12.99 percent plus 2.99 points. After two loans paid off in good standing with the lending partner, a borrower can qualify for loyalty pricing of 10.99 percent plus 1.99 points. The minimum loan is $50,000, the minimum credit score 600, and the loan can cover up to 100 percent of cost (purchase plus rehab) and up to 70 percent of after-repair value, whichever binds first. How close you get to those limits depends on the projects you can document from the past three years. Whether you call it a hard money loan, a private money loan or an investment property loan, these are the numbers that size a Tennessee purchase-and-renovation deal.
A Nashville-area example: a house worth $400,000 after renovation supports up to $280,000 at 70 percent of value. If purchase and renovation cost $300,000 together, the investor brings about $20,000, plus closing costs, the transfer and mortgage taxes, and reserves. The lender decides the final terms.
Foreclosure. Tennessee lenders usually foreclose outside court through a trustee's sale under a deed of trust. State law gives a two-year redemption right after a foreclosure sale, but nearly every deed of trust waives it, so check the recorded instrument before you bid on a trustee's sale property.
The Tennessee pre-offer checklist
1. Add both recordation taxes to closing costs. Transfer tax on the deed, mortgage tax on every loan, including the refinance.
2. Decide which entity will own it, and ask a CPA how Tennessee's franchise and excise taxes apply to it.
3. In Nashville, check the zoning before counting short-term rent. New non-owner-occupied permits are not issued in most residential zones.
4. Price the tax at 25 percent of the value after renovation, times the local rate.
5. Check the loan clears the $50,000 minimum, which matters most on low-priced Memphis houses.
6. Get written contractor bids and carry a ten percent contingency. Nashville labor prices move a scope quickly.
7. If the exit is a DSCR refinance, run it on long-term rent, the new tax and a real insurance quote.
What gets a Tennessee deal declined
A DSCR built on Airbnb income in a Nashville residential zone. Without a permit you can obtain, that income does not exist.
A loan under $50,000. Common on the cheapest houses in parts of Memphis and smaller towns.
A closing budget with no recordation tax in it. Two taxes, charged on the deed and on every loan.
A large renovation as a first deal. Leverage follows documented experience, so a big first scope needs more of your own cash.
A Nashville house you'll live in, even part-time. Our lending partners make business-purpose loans on investment property only.
Want the long version? Two free landlord books cover what a rental really costs to hold and what the new federal housing law actually changed.
Send it through the form above and our lending partner's team will review your deal.
Keep reading
Georgia · Alabama · DSCR loans · Fix and flip loans · Private money lenders · Loan calculator
Get your deal reviewed
Answer these and your deal goes to our lending partner's team, who will contact you about whether it is fundable and on what terms. By sending it you agree to your details being shared with them. Investment property only: our lending partners do not finance a home you will live in.
Got it.
Thank you. Your details are on their way to our lending partner's team, who will contact you shortly.
Questions investors ask
How much is the mortgage tax in Tennessee?
The indebtedness tax is 11.5 cents per $100 of the loan, with the first $2,000 exempt, charged each time a deed of trust is recorded. A flip financed with a hard money loan and then refinanced into a DSCR loan pays it twice.
Does my Tennessee LLC owe excise tax on a flip?
Generally, yes. LLCs doing business in Tennessee owe the 6.5 percent excise tax on net earnings and a franchise tax on net worth, with a $100 minimum, even though the owner pays no state income tax on wages. Some family-owned rental entities qualify for an exemption; ask a Tennessee CPA.
Can I run an Airbnb on a Nashville rental I buy?
In most residential zones, not as a non-owner-occupied short-term rental. Metro Nashville does not issue new non-owner-occupied permits in the AR2a, R, RS and RM zones, and existing permits do not transfer to a buyer. Underwrite on long-term rent unless the parcel's zoning allows a permit.
Can I get a DSCR loan in Tennessee?
Yes. The DSCR rental program lends from $75,000 to $2 million, up to 80 percent of value on a purchase, with no minimum credit score. The loan is sized on the property's rent, which in most of Nashville means long-term rent.
Are private money lenders different from hard money lenders?
In everyday use, no. Both phrases describe a short-term loan from a non-bank lender, secured by the investment property rather than your paycheck. The program terms are the same whichever phrase brought you here.
How much do hard money lenders charge in Tennessee?
Through our lending partners, fix and flip pricing starts at 12.99 percent plus 2.99 points, with loyalty pricing of 10.99 percent plus 1.99 points after two loans paid off. Tennessee's recordation taxes, appraisal, title and closing costs are separate.
Sources
- Tennessee Department of Revenue, realty transfer and mortgage tax, 37 cents per $100 on deeds and 11.5 cents per $100 on loans over $2,000 (accessed Oct 2026)
- Tennessee Department of Revenue, franchise and excise tax, 6.5 percent excise, 0.25 percent franchise with $100 minimum and the 2024 repeal of the property measure (accessed Oct 2026)
- Tennessee Comptroller, property assessment, residential property assessed at 25 percent of appraised value (accessed Oct 2026)
- Metro Nashville Codes, short-term rental permits, owner-occupied and non-owner-occupied permits and zoning limits (accessed Oct 2026)
- Tennessee Code 66-8-101, statutory redemption after foreclosure unless waived (accessed Oct 2026)
Dominion Hard Money does not lend its own funds; it arranges financing through third-party lending partners. All financing is arranged for business purposes only and secured by non-owner-occupied investment property. Not a commitment to lend. All loans subject to underwriting, property review, and approval by the lender. Terms vary by property, borrower experience, and exit strategy.