Tennessee permits short‑term rentals like Airbnb, but the legality hinges on state law, county ordinances, and city regulations that have evolved through 2025. In 2026 hosts must register with the local tax authority, comply with zoning rules, and collect the state’s “vacancy tax.” Failure to meet these requirements can result in fines and the removal of the listing.
Statewide Framework
Tennessee’s “Vacancy Tax” (T.C.A. § 67-13-302) applies to any rental of a dwelling for less than 30 consecutive days. The tax, set at 6 % of the nightly charge, must be remitted to the Department of Revenue. The state does not ban short‑term rentals, but it requires that operators obtain a sales‑and‑use tax permit and file quarterly returns. Recent legislative updates (2024) clarified that the tax applies regardless of whether the host is a resident or a non‑resident investor.
County and City Ordinances
While the state sets the tax baseline, many counties and municipalities have added zoning restrictions. In Davidson County (Nashville), the “Home‑Based Business” ordinance limits rentals to a maximum of 180 nights per year and requires a conditional use permit. Knoxville enforces a “short‑term rental cap” of 90 nights annually in residential zones. Conversely, the city of Memphis has no night limit but mandates a fire‑safety inspection and proof of liability insurance. Hosts should consult the local planning department’s website for the most recent ordinances.
Licensing and Registration
All Tennessee short‑term rentals must register with the Department of Revenue’s “Short‑Term Rental Portal” and obtain a “Vacation Rental Permit.” The application requires proof of ownership or a landlord’s written consent, a copy of the insurance policy, and the local zoning compliance certificate. The permit fee is $100 annually, and renewal is required each January 1.
Tax Collection and Reporting
Beyond the state vacancy tax, hosts must also collect local occupancy taxes where applicable. In Nashville, an additional 2 % city tax is levied. Airbnb automatically withholds these taxes in most cases, but hosts who list independently must calculate and remit them manually. Quarterly filing deadlines are April 15, July 15, October 15, and January 15.
Compliance Tips for Hosts
- Verify the zoning designation of the property before listing.
- Secure written consent from the landlord if you are a tenant.
- Register the rental on the state portal and obtain the vacation rental permit.
- Purchase a minimum of $500,000 liability coverage, as required by many municipalities.
- Keep detailed records of each stay, taxes collected, and expenses for audit readiness.
Can I rent my primary residence on Airbnb?
Yes, as long as the property is in a zone that permits short‑term rentals, you have obtained the necessary permit, and you stay within any night‑limit imposed by the local ordinance.
Do short‑term rentals trigger property‑tax reassessment?
In most Tennessee jurisdictions, short‑term rentals do not automatically trigger a reassessment, but a significant change in use may prompt a review by the county assessor.
What happens if I fail to collect the vacancy tax?
The Department of Revenue can assess penalties up to 25 % of the unpaid tax, plus interest. Repeated violations may lead to the suspension of your sales‑and‑use tax permit.
Are there restrictions for condos or HOA‑governed communities?
Many homeowners’ associations prohibit rentals of less than 30 days. You must review the HOA’s governing documents and obtain board approval before listing.
Is insurance mandatory for Airbnb hosts?
Liability insurance is required by most local ordinances, and Airbnb’s host protection program does not replace it. A policy covering at least $500,000 in bodily injury and property damage is advisable.