In Tennessee, a party may transfer a vehicle title by completing a Tennessee title certificate and an odometer disclosure statement upon the sale of the vehicle. A party who has obtained a vehicle by inheritance should complete an affidavit of inheritance and submit it to the local county clerk’s office.
A party can transfer a vehicle as a gift to certain relatives or by offering the vehicle at a low selling price by completing an affidavit of non-dealer transfers of motor vehicles and boats. A low selling price is defined as 75 percent or less of the vehicle’s fair market value.
Sale by Dealer or Owner
A licensed, professional vehicle salesperson in Tennessee should complete a Tennessee title certificate for the vehicle and a completed odometer disclosure statement and provide these to the buyer.
The buyer may also request a bill of sale, which typically contains the seller’s name, the date of the sale and the sales price. An individual who is not a licensed professional vehicle salesperson can sell up to five vehicles a year titled in their name without needing a dealer's license.
The seller should provide the buyer with the Tennessee car title certificate completed and signed by the previous owner and a completed odometer disclosure statement. If the seller is offering the vehicle at a low price, they should complete the affidavit of non-dealer transfers of motor vehicles and boats.
Emissions Testing Requirements
If the seller or buyer lives in a county that requires an emissions test, the seller should have the car inspected for its annual emissions test prior to sale and provide the paperwork for the test to the buyer. If the seller does not do this inspection, they should let the buyer know the car needs an emissions test.
Costs to Transfer Title
The costs to transfer a vehicle title in Tennessee are:
- Title fee: $11.
- Title transfer fee: $1.
- License plate fee: $26.50 for a standard plate.
A person must pay a local sales tax of 1.50 to 2.75 percent and a 7 percent state sales tax when titling and registering a vehicle. The fee for a duplicate title is $14, and additional county fees for a duplicate title may apply.
A lien holder or out-of-state applicant should apply for a duplicate title through the office of the county clerk of the owner’s last Tennessee residence. An individual does not need a notary to transfer title in Tennessee. The Tennessee Department of Revenue typically takes two weeks after the application date to mail a title to a new owner.
Amount of Tennessee Sales Tax
The amount of sales tax for a vehicle is based on the total vehicle sales price.
Items not included in the total vehicle sales price are:
- Certificate of title and vehicle registration fees.
- Extended warranty/service contract (these are taxed separately).
- Roadside assistance.
- Paint protection plans.
- Wheel and tire protection plans.
- Gap insurance.
- Trade-in allowance.
- Dealer discount when not compensated by a third party and not a rebate.
- Any accessory not already installed on the vehicle that will be installed on a later date, but that was included on the bill of sale.
Determining the Vehicle Sale Price
For example, a vehicle with a price of $30,000 might have a documentation fee of $300, which should be added to the total sales price. The dealer might offer a $5,000 rebate. This should not be added or subtracted, as it is a third-party payment.
The dealer may offer a trade-in allowance of $15,000, which should be subtracted from the total sales price. In that case, the total vehicle sales price at the end of calculations should be $30,000 less $15,000, plus $300 = $15,300.
Calculating Sales Tax in Tennessee
The first $1,600 of the sales price is subject to the local tax. When a single article, defined as a unit being sold, like a truck, has a sales price of $1,600 or more, the sales tax is calculated using the single article tax rate. The single article tax of 2.75 percent is calculated on the second $1,600 of the sales price.
For example, the state tax on the vehicle mentioned above would be $15,300 x 7 percent = $1,071.
If the local sales tax is 2.25 percent, the tax on the first $1,600 would be $1,600 x 2.25 percent, or $36.
The single article tax rate on the vehicle would be $1,600 x 2.75 percent, or $44.
The total tax due on the vehicle would be $1,071 plus $36 plus $44 = $1,151.
Advantage of Gifting
It is better to gift a car rather than sell it for $1. A title transfer is exempt from taxation when one individual gifts a vehicle to another without any kind of consideration.
Consideration is a payment, swap of merchandise, favor or work performed in exchange, forgiveness of a debt or other situation in which the giver receives a benefit from the recipient.
Tax-exempt Family Members
If a person transfers a motor vehicle to certain relatives, the relatives do not have to pay tax on the transfer of title.
Tax-exempt relatives include spouses, siblings and lineal relatives (children, grandchildren, great-grandchildren, parents, grandparents and great-grandparents), as well as spouses of children, grandchildren and great grandchildren.
Other tax-exempt transfers in Tennessee include:
- Divorce. Transfers between spouses as a result of divorce.
- Sole Proprietors. From a sole proprietor’s business to the sole proprietor personally or an individual converting their vehicle to their sole proprietor business.
- Joint Ownership. Vehicles jointly owned by individuals who get the vehicle’s title issued in only one of their names.
- Nonprofits. Transfers made directly to a Tennessee qualified nonprofit organization.
- Government Bodies. Transfers made directly to the federal government, state of Tennessee, Tennessee county or municipality, or an agency of these governments.
Affidavit Required When Gifting a Vehicle
An owner gifting a vehicle should complete the affidavit of non-dealer transfer of motor vehicle or boat form. If the owner does not properly complete this form, the transfer will be subject to the assessment of Tennessee use tax on the market value of the vehicle or boat.
The taxpayer may obtain an appraisal from a reputable motor vehicle or boat dealer to use as the basis for the Tennessee tax assessment.
- Tennessee Department of Revenue: Affidavit of Inheritance
- Tennessee Department of Commerce and Insurance: Selling a Car
- Tennessee Department of Revenue: Odometer Disclosure Statement
- Tennessee Department of Revenue: Taxation of Car and Boat Sales
- Tennessee Department of Revenue: County Clerk Sales and Use Tax Revenue for Automobiles & Boats, March 2021
- Tennessee Department of Revenue: Duplicate Title
- Just in case the County Clerk office needs it, include any current emissions testing information you have with your vehicle transfer paperwork.
- Title and registration fees depend on the county you live in.
- If you are gifting your vehicle, you may have to pay taxes based on the vehicle's fair market value. You will also need to obtain a gifting/Low Selling Price Affidavit form (Form RV-F 1301201) with your paperwork.
- If you are selling your vehicle, you may want to include a Bill of Sale for yourself and the recipient.
- Use your Driver License, Photo ID card, original certified birth certificate, military identification or Photo Learner's Permit as proof of your identity. These cards or documents must list your full name and date of birth.
- For proof of Tennessee residen, you can use a current utility bill (such as electric, water, telephone or cable), but it must include the postmarked envelope that it came in. Other residency documents you can use are current bank statements, rent/mortgage contract, pay check stubs, auto/life/health insurance policy, Tennessee voter registration or receipt for real estate taxes within the last year.
Jessica Zimmer is a journalist and attorney based in northern California. She has practiced in a wide variety of fields, including criminal defense, property law, immigration, employment law, and family law.