Understand the filing fees and tax implications of filing a Tennessee quitclaim deed so you can prepare for the associated costs.
Filing Fees
Each county charges a standard $10 registration fee when you record a quitclaim deed. Counties also have permission to charge an additional $2 service fee (Tenn. Code § 8-21-1001). Please anticipate a $5.00 fee for each additional page in your document.
Taxes
1. Real Estate Transfer Tax
Tenn. Code § 67-4-409 establishes a recordation tax for real estate transfers, including those via quitclaim deeds.
Who Pays the Recordation Tax?
The grantee (the new owner) pays the recordation tax.
Exemptions to the Recordation Tax
The state excludes some transfers from the recordation tax. The following transfers are exempt from the recordation tax:
- A creation or dissolution of a tenancy by the entirety:
- By the conveyance from one spouse or both spouses to a trustee and immediate reconveyance by the trustee in the same instrument as tenants in common, tenants in common with right of survivorship, joint tenants or joint tenants with right of survivorship; or
- By the conveyance from one spouse or both spouses to the original grantor in the instrument and the original grantor’s spouse; or
- By the conveyance from one spouse to the other.
- A division of property that was previously held by tenants in common.
- A release of a life estate to the beneficiaries of the remainder interest.
- An execution of property distribution by a revocable living trust or will.
- A division or release of property as part of a divorce decree or settlement.
- A transfer to or from a revocable living trust created by the transferor or their spouse.
Recordation Tax Rate
The recording tax rate is $0.37 per $100. For standard deeds with title warranties, this tax applies to the consideration received for the property transfer or the value of the property, whichever is greater.
The tax amount is based only on the actual consideration for which the real estate was conveyed if the deed uses terminology that only transfers the grantor’s interest without warranty.
2. US Gift Tax (Form 709)
Tennessee does not charge a gift tax, but you may owe gift tax to the federal government if the property you conveyed via quitclaim exceeds their exemption limit.
The Internal Revenue Service (IRS) updates gift tax exemptions annually, so you can confirm with them to determine whether you owe. In 2024, you must pay gift tax on any amount over $18,000. If you owe gift tax, you can pay it with your annual income tax using Form 709.
3. Capital Gains Tax
Tennessee doesn’t charge capital gains tax. However, you may owe capital gains tax if the consideration you received for a property transfer via a quitclaim deed is over a certain amount. The IRS sets specific rates for capital gains and losses in Topic no. 409 depending on your annual household income, how long you owned the property, and how much of a profit you made from the sale.
If you’re unsure whether you owe capital gains tax, consult a tax professional or real estate attorney. You can file your capital gains statement when you complete your federal income tax at the end of the year.
