Sandra is a newly licensed Tennessee affiliate broker helping her seller client understand closing costs. The seller asks about the Tennessee realty transfer tax. Sandra correctly explains that the tax is $0.37 per $100 of consideration. What additional detail about the calculation method must Sandra also communicate to give a complete and accurate explanation?
Correct Answer
A) Any fraction of $100 in the sales price is rounded UP to the next $100 before calculating the tax
Under Tenn. Code Ann. § 67-4-409, the Tennessee realty transfer tax applies to each $100 of consideration OR FRACTION THEREOF. This means any partial $100 unit must be rounded UP to the next whole $100 before multiplying by $0.37. For example, a sales price of $250,050 would be treated as 2,501 units (not 2,500), resulting in a slightly higher tax. This rounding-up rule is a critical and frequently tested element of the Tennessee transfer tax calculation.
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Related Concepts
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs available to eligible veterans, active-duty service members, and surviving spouses. It offers no down payment and no private mortgage insurance requirements.
An adjustable-rate mortgage (ARM) has an interest rate that changes periodically based on market conditions, typically after an initial fixed-rate period. The rate adjustment is tied to a financial index plus a margin.
Closing costs are the fees and expenses paid by the buyer and seller at the closing of a real estate transaction, beyond the purchase price. They typically range from 2-5% of the purchase price.
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