Airbnb Rules in Tennessee

Short-term rental activity has grown rapidly across Tennessee, supported by a strong tourism economy and a legal framework that allows both owner-occupied and non-owner-occupied short-term rental properties in many areas. Cities such as Nashville, Memphis, Chattanooga, and Knoxville attract millions of visitors each year, making Airbnb rentals an important part of the state’s tourism industry.

At the same time, Airbnb rules in Tennessee are shaped by a combination of state and local laws, meaning short-term rental operators must comply with statewide tax requirements while also following city-specific zoning, permitting, and safety rules. Property owners, hosts, and vacation rental investors need to understand how Tennessee short-term rental laws work in practice to remain compliant.

Disclaimer: This article is intended to serve as a starting point or place to understand Airbnb rules in Tennessee. It does not constitute legal or tax advice. Laws and regulations vary by city and county and may change over time. Hosts have a responsibility to verify and comply with any obligations, restrictions, and procedures that apply to their Airbnb property.

What this guide covers

This article provides information about local laws and state-level requirements that apply to short-term rentals in Tennessee. It covers tax compliance, business tax registration, permit and licensing rules, safety requirements, and how local regulations differ across major Tennessee cities.

Who this is for

This guide is designed for Airbnb hosts, property owners, short-term rental operators, and vacation rental investors operating in Tennessee. It may also be useful for out-of-state investors or property management companies managing short-term rental units across multiple Tennessee cities.

Why this matters

While Tennessee does not impose a single statewide license for short-term rentals, failure to comply with local laws can still lead to fines, permit revocations, and enforcement actions. Local governments may impose zoning rules, occupancy limits, and annual renewal requirements. Understanding applicable taxes and registration obligations is essential for protecting rental operations and maintaining compliance.

What you’ll learn

• How Tennessee’s Short-Term Rental Unit Act defines short-term rentals and limits local restrictions

• When Airbnb hosts must register for business tax and obtain local business licenses

• How state sales tax, local sales taxes, and any local hotel/occupancy taxes apply to Airbnb stays

• Key permit, zoning, and renewal rules in major cities like Nashville, Memphis, Chattanooga, and Knoxville

• Essential safety requirements (smoke/CO alarms) and recommended liability insurance coverage for hosts

Understanding Tennessee’s short-term rental legal framework

A mix of state statutes and local ordinances governs Tennessee's short-term rental laws. The Tennessee Short-Term Rental Unit Act defines a short-term rental as a residential dwelling rented for less than 30 consecutive days and limits how far local governments can go in restricting short-term rentals.

Under state law:

• Local authorities cannot prohibit short-term rentals solely based on classification, use, or occupancy unless public health and safety are at risk.

• Tennessee does not require a state-level license for short-term rental businesses.

• Business tax, sales tax, and safety compliance apply statewide.

At the local level:

• Cities and counties may require permits, zoning approval, business licenses, and annual renewal fees.

• Local regulations often differ significantly between municipalities, requiring hosts to research city-specific rules.

Airbnb compliance requirements in Tennessee at a glance

Tax obligations for Airbnb hosts in Tennessee

Tax compliance is a core requirement for operating short-term vacation rentals in Tennessee.

Sales tax and local sales taxes

Short-term rental properties in Tennessee are subject to Tennessee sales tax at a rate of 7%, plus local sales taxes that typically range from 1.5% to 2.75%. Airbnb and other online marketplace facilitators are responsible for collecting and remitting sales tax on behalf of hosts.

Business tax and gross receipts

Airbnb hosts must register for business tax if gross receipts exceed $10,000 in a city or county. The business tax is calculated based on gross taxable receipts from overnight rentals and falls under Classification 3 for business tax purposes.

Hosts must file a business tax return and pay business tax based on taxable gross receipts generated from short-term rental operations.

Occupancy taxes and use tax

Tennessee does not impose a statewide hotel occupancy tax, but local hotel occupancy taxes may apply depending on the city. Hosts may also be responsible for paying use tax on items used for their rental if sales tax was not paid at purchase.

Permit and licensing requirements

Tennessee short-term rental laws do not require licensing at the state level, but local business licenses and permits are mandatory in many jurisdictions.

Many cities require:

• A permit from the local Codes Department before listing

• Business tax registration at the city or county level

• Compliance with zoning laws that restrict where short-term rental units may operate

City-specific short-term rental rules in Tennessee

Nashville and Davidson County

In Nashville and Davidson County, short-term rental operators must obtain a permit from the Metro Codes Department prior to listing. Permits must be renewed annually and require documentation such as a site plan, proof of liability insurance, and a designated local contact.

Nashville recognizes both owner-occupied rentals and non-owner-occupied properties, with non-owner-occupied short-term rentals restricted to certain commercial or mixed-use districts.

Memphis

Memphis requires a Short Term Rental Property Permit from the City of Memphis Permit Office for each short-term rental unit. Local zoning laws dictate where vacation rentals may operate, and violations may result in fines.

Chattanooga

Chattanooga requires a short-term vacation rental certificate issued by the City of Chattanooga Land Development Office. Hosts must comply with zoning rules and maintain safety requirements before operating legally.

Knoxville

In Knoxville, a short-term rental unit operating permit is required. Local authorities enforce zoning restrictions and safety standards, and hosts must ensure their property qualifies before listing.

Safety and insurance requirements

Short-term rental properties in Tennessee must comply with fire safety codes, including:

• Smoke alarms in each room used for sleeping

• Carbon monoxide alarms installed where required

• Ongoing maintenance and testing of safety devices

Hosts must also maintain liability insurance coverage of at least $500,000 per occurrence when operating an Airbnb property.

Common challenges and solutions

Operating a short-term rental in Tennessee often involves managing overlapping state rules, city regulations, tax requirements, and private restrictions that can be easy to overlook.

Challenge 1: Navigating local regulations across multiple cities

Solution: Review city and county codes for each property location, and confirm requirements directly with the local codes or permitting office before listing.

Local governments in Tennessee have significant flexibility to regulate short-term rentals through zoning, permitting, and operating standards. Hosts who manage properties in more than one city may face different rules in each place. Taking time to understand permit types, renewal timelines, occupancy limits, and local contact requirements can prevent delays, fines, or forced shutdowns.

Challenge 2: Understanding business tax and gross receipts

Solution: Track rental income by jurisdiction and clarify business tax classification and thresholds with the Tennessee Department of Revenue or a qualified tax professional.

Tennessee’s business tax rules can be confusing for short-term rental hosts, particularly when gross receipts approach or exceed the $10,000 threshold in a city or county. Hosts must determine when registration is required, how to classify their activity, and what portion of gross receipts is taxable. Keeping clear records and seeking professional guidance can help avoid underpayment, penalties, or amended filings later on.

Challenge 3: Platform Tax Collection and Host Responsibilities

Solution: Do not rely solely on Airbnb’s tax collection; regularly review platform reports and keep independent records of all tax collected and remitted on your behalf.

While Airbnb and other marketplace facilitators may collect and remit Tennessee sales tax and certain local taxes, hosts remain responsible for overall tax compliance. This includes understanding which taxes the platform handles, what remains the host’s responsibility, and how to document everything for potential audits. Downloading transaction summaries and keeping copies of tax reports can help demonstrate compliance if questions arise.

Challenge 4: HOA, Condo, and Lease Restrictions

Solution: Review HOA bylaws, condominium declarations, and lease agreements before listing, and obtain written approval where required.

Even when a city allows short-term rentals, private rules may still prohibit or restrict them. Many homeowners’ associations, condominium boards, and landlords limit short-term rental activity or require advance approval. Ignoring these restrictions can lead to fines, legal disputes, or termination of lease agreements. Verifying permissions in writing helps protect both hosts and their investments.

Penalties and enforcement

Violations of local Airbnb regulations in Tennessee may result in fines of up to $500 per day, permit revocation, or enforcement action by local authorities. Continued non-compliance can disrupt rental operations and result in additional penalties.

Conclusion and next steps

Tennessee’s short-term rental rules create a relatively flexible framework for Airbnb hosts, but compliance still depends on understanding how state tax obligations interact with city-level permits, zoning, and safety requirements. Local governments actively enforce their regulations, and failing to follow the rules can result in fines, permit revocation, or interruptions to your rental operations.

To get started:

• Confirm local eligibility Check your city or county’s short-term rental ordinance to verify that your property is allowed to operate as a short-term rental under local zoning and permitting rules.

• Register for required taxes and licenses Determine whether your gross receipts meet the threshold for Tennessee business tax registration in your jurisdiction, and apply for any required city or county business licenses.

• Apply for local short-term rental permits In cities like Nashville, Memphis, Chattanooga, or Knoxville, complete the applicable short-term rental permit or certificate process before listing your property.

• Document safety and insurance compliance Install and maintain required smoke and carbon monoxide alarms, and confirm that your liability insurance coverage is sufficient for short-term rental activity.

This approach helps Tennessee hosts operate within the law, reduce enforcement risk, and build a sustainable short-term rental business over the long term.

FAQs

1. Do I need a single, statewide short‑term rental license to operate in Tennessee?

No. Tennessee does not require a statewide short‑term rental license. Instead, compliance is built from several layers: state‑level tax and safety requirements plus city or county permits, business licenses, and zoning rules where the property is located. Hosts should think of compliance as a combination of state taxes and safety obligations and local permits and zoning approvals, rather than a single all‑in‑one state license.

2. If Airbnb collects sales tax for me, do I still need to register for business tax?

Possibly, yes. Airbnb’s role as a marketplace facilitator relates to sales tax collection and remittance, but hosts may still need to register for and pay Tennessee business tax if their gross receipts in a city or county exceed $10,000 and they fall under the applicable business tax classification. Sales tax and business tax are separate obligations, so platform tax collection does not automatically remove the need to register for business tax where thresholds are met.

3. What is the practical difference between state rules and local rules for my Airbnb?

In practice, state rules set the baseline: how a short‑term rental is defined, the absence of a statewide license, and statewide obligations such as sales tax, business tax, and safety compliance. Local rules then add requirements like permits, zoning approvals, occupancy limits, business licenses, and annual renewal fees.

You must satisfy both sets of rules: the state framework plus whatever your city or county imposes on top.

4. How do owner‑occupied and non‑owner‑occupied rentals fit into Tennessee’s framework?

The state framework allows both owner‑occupied and non‑owner‑occupied short‑term rentals, but local governments can regulate them differently through zoning and permitting. For example, some areas (like parts of Nashville and Davidson County) recognize both types but restrict non‑owner‑occupied rentals to specific commercial or mixed‑use districts.

This means your ability to operate a non‑owner‑occupied rental depends heavily on local zoning and permit rules, not just state law.