Taxation of Car and Boat Sales

Typically, automobile and boat sales in Tennessee are subject to sales or use tax. The few exceptions to this rule are when vehicles or boats are sold:

  • between spouses, siblings, lineal relatives (parents and children, grandparents and grandchildren, great grandparents and great grandchildren) or spouses of lineal relatives;*
  • between spouses as a result of divorce;
  • from a sole proprietor’s business to the sole proprietor personally, or by an individual converting his/her vehicle to their sole proprietor business;
  • vehicles jointly owned by individuals who get the vehicle’s title issued in only one of their names;
  • as a gift* from one individual to another without any kind of consideration (e.g., payment, swap of merchandise, favor or work performed in exchange, forgiveness of a debt, or other situation in which giver receives a benefit from the recipient)
  • directly to a Tennessee qualified nonprofit entity; and
  • directly to the federal government,  the state of Tennessee, Tennessee county or municipality or an agency of these governments.

More information on sales and use taxes related to car and boat transfers may be found here.

* Requires submission of Affidavit of Non-dealer Transfers of Motor Vehicles and Boats