Tennessee Short-Term Rental Rules, City by City (Verified July 2026)
Program and regulatory figures verified July 24, 2026. Details change; confirm your scenario with us.
Buying a short-term rental in the wrong Tennessee jurisdiction is a six-figure mistake. This is the city-by-city status table we check before writing a single loan: dated, sourced, and updated when the councils move. Treat every fee as approximate and confirm it with the city.
The 2026 status table
| Jurisdiction | Status (as of July 24, 2026) | Cost (approximate, verify) | Key rules |
|---|---|---|---|
| Nashville (Davidson) | Two permit types; non-owner-occupied only in ~29 mixed-use/commercial/downtown districts | ~$313 a year + insurance | Owner-occupied for natural persons only; no new NOO in R/RS/RM since 2022; grandfathered renew until sold; non-transferable |
| Memphis (Shelby) | Permit required citywide since 7/1/2023 (Ordinance 5631); no zoning ban | Permit + renewal (per ordinance) | Inspection + insurance; unpermitted operation fined $50 per day per unit; most permissive big-metro regime |
| Gatlinburg | Tourist residency permit; allowed in higher-density and commercial zones, barred in low-density residential | Base permit + per-bedroom fee (per city) | Combined lodging tax ~12.75% on stays; confirm zoning before buying |
| Pigeon Forge | Registration plus a short-term rental unit permit | Fees per city (reconcile with cityofpigeonforge.com) | Occupancy caps by property; fee stack varies by source, so we verify at the city |
| Sevierville / Sevier County (uninc.) | City operational permit; unincorporated county has no zoning ban | Operational permit (per city) | County adds 3% lodging tax; jurisdiction follows the parcel, not the mailing address |
| Chattanooga | Homestay (owner-occupied) in residential zones; absentee only in commercial zones | ~$250 homestay / ~$500 absentee | Owner resides 183+ days for homestay; 2023 owner lawsuit dropped, ordinance stands |
| Knoxville | Type 1 (owner-occupied) in residential zones; Type 2 (investor) in nonresidential zones only | ~$70 Type 1 / ~$120 Type 2 | Neighbor notification; verify any per-owner Type 2 cap in the current Municode |
Statuses and fees verified July 24, 2026 against city, county, and state sources; several regimes are volatile or secondary-sourced. Confirm current rules and exact fees with the jurisdiction before purchase.
There is no Tennessee statewide STR law
Beyond one statewide protection, Tennessee leaves short-term rentals to local zoning, and the regimes vary sharply. The protection is grandfathering: the Short-Term Rental Unit Act (T.C.A. §13-7-603) shields a property already used as an STR before a local ordinance takes effect. That shield is fragile. It dies when the property is sold or transferred, after 30 continuous months of non-STR use, or after three violations, and it does not transfer to a buyer. That single rule is why "buying an operating STR does not buy its permit" holds in every Tennessee city. This is attorney territory; confirm any grandfathering claim with a Tennessee attorney.
Does Memphis require a short-term rental permit?
Yes, since July 1, 2023, under Ordinance 5631, which amended the city code to require a permit for rentals under 30 days across Memphis and unincorporated Shelby County. Operators need an inspection and insurance, and running unpermitted draws a fine reported at $50 per day per unit. What Memphis notably lacks is a zoning ban, which makes it the most permissive big-metro regime in the state: a permit path, not a prohibition. Fee specifics move, so verify the current schedule with the city before you budget.
Can I run an Airbnb in Chattanooga or Knoxville?
Yes, within each city's split system. Chattanooga allows owner-occupied homestays in residential zones (the owner must reside 183+ days a year) and confines absentee, non-owner-occupied rentals to commercial zones; a 2023 property-owner lawsuit challenging the rules was dropped in February 2024, so the ordinance stands. Knoxville splits Type 1 owner-occupied permits, allowed in residential zones, from Type 2 investor permits, allowed only in nonresidential zones, with neighbor notification required; verify any per-owner Type 2 cap in the current Municode before you count on a second one.
What taxes do I pay on Tennessee Airbnb income?
Tennessee takes no personal income tax, but "no income tax" does not mean untaxed revenue. STR stays owe 7% state sales tax plus a local option and any local occupancy or lodging tax: roughly 16.25% plus $2.50 per night in Nashville, about 12.75% in Gatlinburg, and a 3% county lodging tax in unincorporated Sevier County. A tenant who stays 30+ continuous days becomes exempt, and long-term residential rent is not subject to sales tax at all. Marketplaces like Airbnb and VRBO collect and remit the state-administered pieces; you remit any locally administered occupancy tax. Underwriting uses gross rent before lodging taxes. Confirm current rates with the city and your CPA.
Tax and entity rules summarized here are educational, not advice; your CPA and a Tennessee attorney apply them to your facts.
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Frequently asked questions
Does Memphis require a short-term rental permit?
Yes, since July 1, 2023, under Ordinance 5631: a permit is required for rentals under 30 days across Memphis and unincorporated Shelby County, with inspection and insurance, and unpermitted operation is fined around $50 per day per unit. There is no zoning ban, which makes Memphis the most permissive big-metro STR regime in Tennessee. Verify current fees with the city.
Can I run an Airbnb in Chattanooga or Knoxville?
Yes, within each split system. Chattanooga permits owner-occupied homestays (owner resides 183+ days) in residential zones and absentee rentals in commercial zones only; a 2023 lawsuit was dropped in February 2024, so the ordinance stands. Knoxville allows Type 1 owner-occupied permits in residential zones and Type 2 investor permits in nonresidential zones only. Confirm zoning first.
What taxes do I pay on Tennessee Airbnb income?
No personal income tax, but STR stays owe 7% state sales tax plus local option and local occupancy tax: roughly 16.25% plus $2.50 per night in Nashville, about 12.75% in Gatlinburg, and 3% county lodging tax in unincorporated Sevier County. Stays of 30+ continuous days become exempt. Platforms remit the state pieces; confirm current rates with your CPA.
Can I keep an operating Tennessee Airbnb's permit when I buy it?
No, in any Tennessee city. Permits and T.C.A. §13-7-603 grandfathering are non-transferable and die at sale or transfer. You apply fresh under the jurisdiction's current rules, so the seller's rent roll is not a guarantee of your legal right to operate. We verify the permit path before underwriting; confirm it with a Tennessee attorney.
Mike Certo · NMLS #260555 · Cornerstone First Mortgage NMLS #173855 · Equal Housing Lender. Educational content, not a loan commitment and not legal or tax advice. Tennessee franchise and excise tax, FONCE eligibility, property-tax classification, and city short-term-rental rules change and depend on your facts; confirm your situation with your CPA, a Tennessee attorney, and the city before you buy. Loans are subject to buyer and property qualification.