Tennessee’s mix of vibrant cities, country music heritage, and scenic countryside draws an ever-growing influx of visitors. From the iconic live music scene in Nashville to the Great Smoky Mountains near Gatlinburg and Pigeon Forge, the Volunteer State offers abundant opportunities for short-term rental hosts on platforms like Airbnb and Vrbo. However, Tennessee does not impose a single, statewide set of rules specifically for short-term rentals. Instead, property owners should understand their state-level tax responsibilities and pay close attention to local ordinances that can differ widely. Below is an overview of what you need to know about running a short-term rental in Tennessee, including licensing requirements, lodging taxes, and major city regulations.
Tennessee’s Definition of a Short-Term Rental
Tennessee does not adopt a single definition for short-term rentals across all jurisdictions. In many cities or counties, any accommodation rented for fewer than 30 days is classified as transient lodging. Some local governments add unique stipulations, especially in popular tourist areas, by setting minimum night stays or limiting the number of days per year a property can operate as a short-term rental. Checking with municipal zoning or lodging ordinances can clarify whether special rules—such as safety inspections or occupancy limits—apply in your area.
Starting a Short-Term Rental Business in Tennessee
Short-term rental hosts in Tennessee typically handle two main layers of compliance: state tax regulations and city or county ordinances. At the state level, owners may need to collect and remit Tennessee’s sales tax and, in certain areas, an additional local hotel or occupancy tax. Booking platforms like Airbnb might manage some portion of these taxes, but hosts should verify whether every required tax is fully covered. Additionally, forming a legal business entity (e.g., an LLC) may require registering with the Tennessee Secretary of State.
Local rules can be more detailed in highly visited communities, with some municipalities requiring permits or capping how many short-term rentals can operate in specific neighborhoods. Homeowners associations (HOAs) can also impose more stringent bylaws or ban short-term rentals outright. It’s wise to review municipal websites and HOA covenants before listing your property to avoid potential violations or fines.
Short-Term Rental Licensing Requirement in Tennessee
Tennessee does not maintain a single, statewide short-term rental license. Instead, city councils or county boards decide whether a special permit or license is needed for transient lodging. Areas with heavy tourism, such as parts of Nashville or the Smoky Mountains region, often adopt structured short-term rental programs involving:
- Routine safety checks for smoke detectors and fire extinguishers
- Occupancy or noise ordinances in residential neighborhoods
- Caps on the number of rental permits issued in certain areas
Hosts failing to comply with local guidelines risk fines, forced removal of their listings, or other enforcement actions. Monitoring your locality’s announcements is crucial, as regulations can change in response to housing availability or neighborhood feedback.
Tennessee Short-Term Rental Taxes
Short-term rentals in Tennessee typically trigger multiple taxes:
- State Sales Tax: Tennessee’s base sales tax rate is 7%, which often applies to lodging. However, local sales tax add-ons can push the total rate higher.
- State Hotel-Motel Tax or Local Occupancy Tax: Many municipalities impose an additional hotel or occupancy tax on short-term rentals. The combined burden may reach double digits in tourist-heavy regions.
If a booking platform does not automatically collect and remit all required taxes, owners must register with the Tennessee Department of Revenue to file returns, generally monthly or quarterly, depending on revenue. Maintaining clear records of nightly rates, cleaning fees, and other charges ensures proper tax calculation. Late or inaccurate filings can lead to penalties and interest.
Vacation Rental Tax Deductions
Federal guidelines allow Tennessee short-term rental operators who rent a property for more than 14 days a year to claim potential tax deductions, including mortgage interest, property taxes, utilities, maintenance, and depreciation. Detailed record keeping of rental days versus personal use days is critical if you also occupy the property. Many hosts rely on a tax professional to ensure they maximize legitimate deductions while complying with IRS rules—particularly if they juggle multiple properties or partial personal use.
Short-Term Rental Regulations by Major Locations in Tennessee
Nashville
Nashville’s booming tourism and music scene have led to extensive short-term rental regulations. Metro Nashville differentiates between “owner-occupied” and “non-owner-occupied” permits, capping how many non-owner-occupied rentals can operate in certain zoning districts. The city charges local hotel taxes in addition to the state’s sales tax, and hosts must renew their short-term rental permits (if required) regularly. Violations—like exceeding occupancy limits or ignoring noise ordinances—can result in hefty fines or permit revocation.
Memphis
Memphis, known for its musical heritage, requires hosts to collect local and state sales taxes for short-term lodging. While the city does not maintain a blanket short-term rental ban, owners must follow standard residential zoning rules and building codes. Neighborhood associations near popular attractions might push for stricter guidelines or occupant caps, so hosts should monitor city council discussions. Repeated nuisance complaints about large gatherings can prompt local authorities to consider additional restrictions or permit schemes.
Knoxville
With proximity to the Great Smoky Mountains and the University of Tennessee, Knoxville regularly welcomes short-term guests. The city enforces typical lodging tax requirements, and operators who exceed certain revenue thresholds might need a business license. Checking neighborhood or HOA rules is especially relevant near campus or historically residential areas. While Knoxville has not established a specialized short-term rental permit system at present, local boards may consider new ordinances if housing concerns or neighbor disputes arise.
Chattanooga
Chattanooga’s blend of outdoor attractions and growing tech scene fuels consistent short-term rental demand. The city generally requires collecting sales tax plus any local occupancy taxes, and some residential zones may regulate short-term rentals through neighborhood plans. If repeated complaints emerge regarding parking or noise, the city council might update its approach to short-term rentals. Owners should confirm that their listing meets all building and safety codes, especially in older neighborhoods.
Gatlinburg / Pigeon Forge
Gateway communities to the Great Smoky Mountains attract significant volumes of vacationers, making short-term rentals highly profitable. Local governments often closely monitor building safety, occupant limits, and taxes. Hosts typically pay a city or county lodging tax on top of Tennessee’s state taxes, raising total percentages for guests. Because Gatlinburg and Pigeon Forge are very popular year-round, local officials or HOAs might impose additional restrictions or demand stricter enforcement of noise, trash disposal, or parking regulations to maintain neighborhood quality.
Takeaway
From music-driven Nashville to scenic Smoky Mountain gateways, Tennessee offers a lively market for short-term rental operators. Yet, property owners must navigate decentralized rules—meeting state sales and lodging taxes and following local permit programs if they exist. Collecting taxes (or ensuring the platform collects them), staying current on local occupancy or zoning ordinances, and keeping thorough financial records help keep short-term rental operations in good standing.
Since municipalities adjust rules in response to rising tourism and community concerns, operators should watch for city council agendas and neighborhood association announcements. By heeding all permit requirements, paying taxes accurately, and respecting local guidelines, hosts in the Volunteer State can run a legally compliant and successful short-term rental while giving guests an unforgettable taste of Tennessee hospitality.
%201.webp)
%203.webp)
%201.webp)
.webp)
