Overview
Tennessee combines no state income tax with growing metros in Nashville and Memphis, plus the Smoky Mountains region. Nashville has exploded as a destination for corporate relocations, healthcare, and entertainment. The state offers Southern hospitality with economic opportunity.
Tennessee Real Estate Market
Nashville has been one of the hottest markets in the nation, with prices more than doubling in many areas since 2015. Corporate relocations (Oracle, AllianceBernstein) and population influx continue to drive demand. Memphis offers much more affordable options with different dynamics. Knoxville and Chattanooga provide mid-size alternatives.
Property Taxes in Tennessee
Tennessee has very low property taxes, helping offset home prices.
Average effective rate: 0.71%
Annual tax on median home: ~$2,556
Assessment ratio: 25% of appraised value for residential
First-Time Buyer Programs
THDA Programs: Tennessee Housing Development Agency offers:
- Great Choice Home Loan - Below-market rates
- Homeownership for the Brave - For military
- Down Payment Assistance - Up to $15,000
- Mortgage Credit Certificate
Closing Costs in Tennessee
Tennessee closing costs are moderate, typically 2-3% of purchase price.
Common costs include:
- Title insurance: Based on purchase price
- Transfer tax: $0.37 per $100
- Mortgage tax: $0.115 per $100 of debt
- Recording fees: County-dependent
Frequently Asked Questions
Nashville's fundamentals remain strong with continued corporate relocations and population growth. However, prices have risen significantly, reducing affordability. Suburban areas offer better value than the urban core.
Tennessee has no state income tax on wages (Hall Tax on investment income was eliminated in 2021). Combined with low property taxes, this creates a favorable overall tax environment.
Memphis offers much lower prices with strong rental yields for investors. However, population growth is slower, crime concerns exist in some areas, and appreciation has been more modest than Nashville.