Knoxville, TN, USA / Old City
True Cost of Ownership — Old City, Knoxville, TN, USA
What a non-resident foreign buyer actually pays, beyond the asking price — every figure below is sourced, not estimated. Built for the analyst running the deal: the cash-flow side of an underwriting model, itemised and cited, with the judgment calls left where they belong.
For your model
The cash-flow side of your underwriting, in 4 lines
| When | What | Figure |
|---|---|---|
| At closing (year 0) | Cash outasking price plus every sourced acquisition cost below | $401,480 |
| Each year held (years 1–5) | Holding costsourced annual costs; operating expenses excluded, as stated below | −$1,905 |
| Each year let | Rent after taxyield after the sourced taxes below, before operating costs | 7.94% |
| At exit (year 5) | Cash backnet proceeds after every sourced exit cost below | $378,400 |
The discount rate is yours, on purpose. Your cost of money and the risk premium you carry for this market are your firm's judgment, not a figure a data vendor should invent. This page gives your analyst the dated, cited cash-flow inputs; the rate, and the decision, stay with you. Every figure above is itemised and sourced in the sections below.
Download these cash flows as CSV Same engine, same assumptions: one row per line item with the source and as-of date on each, plus a year-by-year net-flow schedule your own IRR formula can run on directly. The rate stays yours.
Can a foreign buyer own and finance this?
| Item | Value |
|---|---|
| Foreign ownership allowed | Allowed |
| Mortgage available to foreign buyers | Answered with sources below Non-resident foreign financing terms, loan-to-value, reserves and the rate premium are itemised in the capital-stack section further down this page, each figure linking to a lender programme page or primary source. |
Eligibility facts for Knoxville, TN, USA — general market conditions, not a guarantee for any specific buyer or lender. Rules vary by nationality and residency status in some jurisdictions; always confirm with a local real-estate attorney before relying on this for a transaction.
Provenance of this section, stated plainly. The ownership line is an enrichment-table fact. Unlike every cost line further down this page it does not carry its own source link or as-of date, so it is a weaker claim than the cited figures beside it; where a state restricts purchases by nationality, the sourced restriction is named in the capital-stack section below. We are moving these to sourced country-level rules, the way residency-by-investment already works.
Investor view: rental yield
| Item | Value |
|---|---|
| Assumed annual rent | $38,000 (estimated) |
| Gross yield | 9.50% |
| Yield after tax, before operating costs | 7.94% |
Estimated from this neighborhood's typical rental yield (9.50%) — edit "Expected annual rent" below to use your own figure instead.
This figure counts taxes, government fees and agent commissions only. It excludes operating costs: insurance, HOA or service charge, property management, maintenance and vacancy. Those are building-level commercial terms rather than public record, so they cannot carry a primary source, and this product does not print numbers it cannot cite.
The §871(d) election taxes NET rental income, after expenses and depreciation. This engine has no expense input, so the graduated bands are applied to GROSS rent, which overstates the rental tax for an elected landlord. Where several jurisdictions are shown side by side the overstatement is larger in the ones that levy income tax, so it changes the ORDER of the comparison and not only its level.
Is this price fair? (based on recent closed sales)
| Item | Value |
|---|---|
| Closed sales used | 20 |
| Neighborhood median ($/sqft) | $570 |
Enter this unit's square footage in the assumptions above for a direct fairness verdict against these comps. Based on 20 closed sales recorded for Old City. We do not yet have buyer-nationality data to compute a specific foreign-buyer price premium; this is an objective closed-comps check, not a nationality-based comparison. Not an appraisal — actual fair value depends on condition, floor, view and other factors a licensed appraiser or agent should weigh in.
Acquisition (one-off, paid at purchase)
| Item | Amount |
|---|---|
Land transfer / deed tax[1][2]Tennessee realty transfer (recordation) tax: 0.37% ($0.37 per $100) of the greater of consideration or property value, paid by the GRANTEE (buyer) to the county register.Long-standing rate; date is the DOR guidance publication date. Tenn. Code Ann. 67-4-409. |
$1,480 |
| Mansion / luxury transfer tax | not yet sourced |
Buyer's agent commission[3]Traditionally the US buyer paid no direct agent commission (the seller-paid total covered both sides).Since the NAR settlement (17 Aug 2024), buyers must sign representation agreements stating how their agent is paid, and may now pay their agent directly (~2.7% typical side rate) if the seller offers nothing. Encoded at the traditional 0% with this caveat — a buyer negotiating today should budget up to ~2.7% as a possible direct cost. |
$0 |
| Legal / closing costs | not yet sourced |
Sources
- [1]TN DOR published guidance REC-1 — Recordation Tax Overview (as of 2026-07-25)
- [2]TN DOR REC-11 — Transfer Tax Responsible Party (as of 2026-07-25)
- [3]Federal Reserve Board — FEDS Note: Commissions and Omissions (NAR settlement mechanics) (as of 2026-07-20)
Annual holding costs (× 5 years)
| Item | Amount |
|---|---|
Annual property tax (county effective rate)[1]ACS-derived EFFECTIVE property-tax rate for this county: median real-estate taxes paid (ACS table B25103, $1,332) divided by median owner-occupied home value (ACS table B25077, $279,700), ACS 5-Year vintage 2023.This is a COUNTY AGGREGATE of owner-occupied homes — not the millage rate for any specific parcel. Bulk-imported from the already-authoritative US Census dataset and marked verified as a government-source import, not machine-guessed research. |
$1,905 |
Sources
Rental income tax (per year, while let)
| Item | Amount |
|---|---|
Rental income tax (federal)[1][2][3]§871(d) election: NRA may elect to treat US rental income as effectively connected, taxing NET income (after expenses/depreciation) at ordinary graduated rates instead of 30% gross.Requires timely 1040-NR + Form W-8ECI. Bands are TY2025 single-filer. HONESTY CAVEAT: no expense input, so bands apply to GROSS rent here, overstating tax for an elected landlord — deliberate, safe-direction overstatement, stated in notes. |
$4,322 |
Rental income tax (state)[4]Tennessee has NO individual income tax: the Hall tax reached only interest/dividends and was repealed for tax periods beginning on or after January 1, 2021.Rental income of resident and nonresident individuals alike is untaxed at the state level. |
None — not levied |
Sources
- [1]IRS — Taxation of nonresident aliens (as of 2026-07-20)
- [2]IRS — FDAP income (W-8ECI mechanism) (as of 2026-07-20)
- [3]IRS — Federal income tax rates and brackets (as of 2026-07-20)
- [4]TN DOR — Hall Income Tax (archived tax) (as of 2026-07-25)
How the election is modelled here. The §871(d) election taxes NET rental income, after expenses and depreciation. This engine has no expense input, so the graduated bands are applied to GROSS rent, which overstates the rental tax for an elected landlord. Where several jurisdictions are shown side by side the overstatement is larger in the ones that levy income tax, so it changes the ORDER of the comparison and not only its level.
Exit (paid on sale)
| Item | Amount |
|---|---|
Capital gains tax (federal)[1][2][3]Under IRC §897 (FIRPTA), gain on a foreign person's disposition of US real property is treated as effectively connected income taxed at LTCG rates: 0/15/20%.Thresholds ($48,350/$533,400, single filer, TY2025) applied to gain alone. Short-term (<=1yr) not modeled. State CGT separate. FIRPTA withholding is the prepayment mechanism. |
$0 |
Capital gains tax (state)[4]No Tennessee capital gains tax for individuals — there is no individual income tax to reach the gain; the DOR's complete tax enumeration lists none.Federal CGT still applies (see the federal lines). |
None — not levied |
Seller's agent commission[5]US total real-estate commission, encoded from the Federal Reserve's CoreLogic-MLS study: buyer's-agent side averages ~2.7% nationally, and the traditional structure paired it with a similar listing-side rate (~5.4% total, historically seller-paid).Since the NAR settlement took effect 17 Aug 2024, seller-paid buyer-agent compensation can no longer be offered via MLS and everything is negotiable — actual totals vary and are trending down, and are notably lower in the Northeast, California and the Pacific Northwest. 5.4% is a documented ceiling-style estimate, not a quote. |
$21,600 |
Withholding at closing on the sale[6][7]FIRPTA withholding (IRC §1445): when a foreign person disposes of a US real property interest, the BUYER must withhold 15% of the amount realized and remit it to the IRS.This is a prepayment credited against the seller's actual capital-gains liability, not an additional tax. Rate was 10% before 17 Feb 2016. See conditional rows for reduced-rate/exemption cases.Cash withheld at closing, credited against the tax liability itemised above — not an additional tax. |
$60,000 |
State withholding at closing[4]No Tennessee closing withholding on nonresident sellers: the DOR's complete tax enumeration contains no withholding tax of any kind, consistent with the absence of an individual income tax.Sourced negative by official enumeration (no affirmative DOR statement exists). Federal FIRPTA still applies to foreign sellers. |
None — not levied |
Sources
- [1]IRS — Topic No. 409, Capital gains and losses (as of 2026-07-20)
- [2]IRS — Definitions of terms and procedures unique to FIRPTA (as of 2026-07-20)
- [3]Legal Information Institute — 26 U.S. Code §897 (as of 2026-07-20)
- [4]TN DOR — complete tax list (no individual income/CGT present) (as of 2026-07-25)
- [5]Federal Reserve Board — FEDS Note: Commissions and Omissions: Trends in Real Estate Broker Compensation (May 2025, CoreLogic MLS data) (as of 2026-07-20)
- [6]IRS — FIRPTA withholding (as of 2026-07-20)
- [7]Legal Information Institute — 26 U.S. Code §1445 (as of 2026-07-20)
Know before you buy (informational — not summed)
| Item | Amount |
|---|---|
US estate-tax exposure (non-resident)[1][2][3]US estate tax exposure for NRA holding US real estate directly (IRC §§2101-2108): exemption is effectively $60,000 of US-situated assets ($13,000 unified credit), vs multi-million exemption for citizens/residents.Above threshold, Form 706-NA applies unified rate schedule 18%-40%. A foreign buyer who dies owning a $500,000 US property directly can leave heirs a low-six-figure estate-tax bill. Rendered as an INFORMATIONAL risk line, never summed into totals. EFFECTIVE DATE: the $60,000 figure is the practical effect of the $13,000 unified credit in IRC s.2102(b)(1), verbatim "A credit of $13,000 shall be allowed against the tax imposed by section 2101." That amount was set by Public Law 100-647 s.5032(b)(1)(A), enacted 10 November 1988 and applying to "estates of decedents dying after Nov. 10, 1988", replacing a prior $3,600. THE STATUTE CARRIES NO INFLATION INDEXING. The threshold has therefore stood unchanged for thirty-eight years while the exclusion for a US citizen or resident reached $15,000,000 in 2026. Structural caveat that must travel with this line: the exposure attaches to DIRECT ownership of US real property; shares in a foreign corporation are non-US-situs, which is why blocker structures dominate inbound holdings. We do not model holding structure, so this stays informational and is never summed into a total. |
Threshold: $60,000 |
Tax-treaty caveat[4][5]The US has income-tax treaties with ~65 countries and estate/gift-tax treaties with ~15; a treaty can lower the 30% gross rental withholding, modify estate-tax outcomes, and change filing mechanics.This product models foreign-vs-resident treatment ONLY, not per-treaty outcomes per nationality. IN FORCE NOT LATER THAN 2011-09-12 (wave wf_64f4120f-b14). LOWER BOUND, not a start date: verified already in force then, not that it began then. Basis: IRS Notice 2011-64 in Internal Revenue Bulletin 2011-37 (12 Sep 2011), a dated official country-by-country table of US income tax treaties. Source: https://www.irs.gov/irb/2011-37_IRB. Full reasoning: data/cost-rules/research/2026-07-27-lower-bounds.json. |
Depends on tax treaty |
Sources
- [1]IRS — Some nonresidents with U.S. assets must file estate tax returns (as of 2026-07-20)
- [2]IRS — Instructions for Form 706-NA (as of 2026-07-20)
- [3]IRS — Estate tax for nonresidents not citizens of the United States (as of 2026-07-20)
- [4]IRS — United States income tax treaties A to Z (as of 2026-07-20)
- [5]IRS — Estate & gift tax treaties (international) (as of 2026-07-20)
* Lines marked with an asterisk are cash WITHHELD at closing (FIRPTA / state withholding) and credited against the taxes itemised above — shown for cash-flow planning, excluded from cost totals to avoid double counting.
Totals
| Item | Value |
|---|---|
| Total acquisition cost | $1,480 |
| Effective acquisition cost | 0.37% of price |
| Annual holding cost (per year) | $1,905 |
| Total holding cost (5yr) | $9,524 |
| Rental yield after tax, before operating costs | 7.94% |
| Total exit cost | $21,600 |
| Withheld at closing (credited back)* | $60,000 |
| Net proceeds on exit | $378,400 |
| Total cost of ownership (5yr) | $54,212 |
Totals are computed on unrounded figures and then rounded for display — per-year × years arithmetic re-done on the rounded numbers can differ by a few units.
What "true cost" covers, and what it does not. This figure counts taxes, government fees and agent commissions only. It excludes operating costs: insurance, HOA or service charge, property management, maintenance and vacancy. Those are building-level commercial terms rather than public record, so they cannot carry a primary source, and this product does not print numbers it cannot cite. Total cost of ownership, the annual holding cost and the repatriation figures below are all on that same basis.
Financing as a non-resident (capital stack)
How a foreign-national buyer typically finances a US purchase. Non-resident foreign nationals do not qualify for conforming/FHA loans, so these are non-QM lender terms — every figure links to a lender program page or primary source.
| Item | Value |
|---|---|
| Typical max loan-to-value | 65–75% (model 70%) |
| Loan at 70% LTV | $280,000 |
| Down payment (25–35%) | $120,000 |
| Cash reserves required | 6–12 months (PITIA; may be held in a foreign bank account) |
Typically a DSCR loan — no US credit score, income, or tax returns required; a foreign credit report or bank-reference letter substitutes; US-LLC vesting is available.
Foreign-national loans price above conforming US rates; lenders confirm a premium but do not publish a fixed number (industry estimates ~1-2 percentage points, not lender-verified).
- Non-resident foreign nationals are not eligible for GSE-backed loans: Fannie Mae warrants the borrower is "legally present" (Selling Guide B2-2-02); Freddie Mac excludes borrowers with no lawful US residency (Guide 5103.2). FN loans are therefore non-QM / portfolio.
- FHA financing is closed to all non-permanent residents for case numbers on/after 2025-05-25 (Mortgagee Letter 2025-09).
Sources: Angel Oak — FN program (70% LTV, 12mo reserves, LLC ok) · A&D Mortgage — FN DSCR (up to 75% CLTV, 12mo reserves) · LendSure — FN (up to 75% LTV, foreign credit report ok) · Acra Lending — FN (max 70% purchase / 65% refi) · Fannie Mae Selling Guide B2-2-02 (legal-presence warranty) · HUD Mortgagee Letter 2025-09 (FHA residency). Retrieved 2026-07-23. Financing terms vary by lender and change frequently — confirm current terms with a licensed lender. Not lending advice.
What actually gets home (exit & repatriation)
| Item | Value |
|---|---|
| Capital invested (price + acquisition costs) | $401,480 |
| Expected sale price at exit | $400,000 |
| Total exit cost (incl. FIRPTA-credited taxes) | $21,600 |
| Net proceeds on exit | $378,400 |
| Profit repatriated vs invested capital | −$23,080 |
Net-of-tax result for a non-resident seller, built from the sourced exit-tax lines above (every figure links to its source). No capital controls restrict moving sale proceeds out of this jurisdiction. Reporting obligations and your own country's rules still apply — confirm with a licensed advisor. This is not tax or legal advice.
This page presents sourced public information about property costs and taxes for US real estate — it is not tax or legal advice. Figures are accurate as of the dates shown next to each line and can change with new legislation. Always verify with a qualified US-licensed lawyer or tax advisor before transacting. This calculator covers foreign-vs-resident tax treatment only — it does not account for bilateral tax-treaty effects specific to your nationality.
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