If you play a sport at a D1 college and transfer to D3 college to play do you have to sit out a year?

If your school moves up a division, no, the players do not sit for a year. The school is placed on a one-year probation period, after which they are full members of Division I.

If, however, a player transfers schools, the NCAA requires that the player sits for a period of one year before being added to the active roster. This is regardless of divisions, teams, conferences, etc.