Nashville, Tennessee Short-Term Rental Regulation: A Guide For Airbnb Hosts

What are Short-Term Rental (Airbnb, VRBO) Regulations in Nashville, Tennessee?

Nashville's vibrant music scene, southern hospitality, and growing tourism industry have made it a hotspot for short-term rentals. However, the city has implemented comprehensive regulations to balance the interests of property owners, guests, and local communities. If you're considering entering the Nashville short-term rental market, understanding these regulations is crucial for legal operation and long-term success.

Starting a Short-Term Rental Business in Nashville, Tennessee

Starting a short-term rental business in Nashville requires careful planning and adherence to local regulations. The Metropolitan Government of Nashville and Davidson County has established specific requirements that all short-term rental property (STRP) operators must follow.

Permit Requirements

In Nashville, anyone wishing to rent a property on short-term rental platforms such as Airbnb and HomeAway must receive a permit from the Metro Codes Department prior to listing. Operating without a permit is illegal and can result in significant penalties.

Tax Obligations

STRP operators in Nashville are required to remit business, sales, and hotel occupancy taxes to the city and state. Understanding and complying with these tax requirements is essential for maintaining your permit and avoiding penalties.

Zoning Considerations

Zoning laws in Nashville play a crucial role in determining where STRPs can operate:

• Owner-Occupied STRPs are allowed in all residential districts, except NS (No STR) zones
• Non-Owner Occupied STRPs are allowed only in certain non-residential zones

Before investing in a property for short-term rental purposes, it's essential to review the Metro Nashville District Land Use Table to determine zoning eligibility.

Challenges and Opposition

Short-term rental operators in Nashville face various challenges, including opposition from neighbors and changing regulations. Some hosts have reported neighbors in East Nashville actively trying to shut down Airbnbs by calling in false reports. Others have expressed frustration with the city's aggressive enforcement and changing permit requirements.

In conclusion, while Nashville offers opportunities for short-term rental operators, success in this market requires careful attention to regulations, proactive compliance, and awareness of the local enforcement climate. By understanding and following the rules, you can establish a legal and profitable short-term rental business in Music City.

Short-Term Rental Licensing Requirement in Nashville City, Tennessee

Nashville's Metropolitan Government has established a comprehensive licensing framework for short-term rental properties. Understanding these requirements is essential for anyone looking to operate a legal short-term rental in Music City.

Permit Types and Eligibility

Nashville offers two distinct types of STRP permits, each with specific eligibility criteria:

1. Owner-Occupied Permits: These permits are for properties where the owner permanently resides. To qualify:

1. The owner must be a natural person (not an LLC, corporation, or trust)
2. Only one permit per lot is issued in single-family and two-family zoning districts
3. The owner must provide substantial documentation proving they live at the property
4. For two-family units, both must be owned by the same person, with one unit serving as the primary residence

2. Non-Owner Occupied Permits: These permits are for properties where the owner does not reside on-site. Important restrictions include:

1. New permits are only issued in certain non-residentially zoned areas
2. No new permits are issued in AR2A, R, RS, or RM zones
3. Existing permit holders in restricted zones may renew, but permits are not transferable when the property is sold
4. Properties within Specific Plan (SP) or Planned Unit Developments (PUD) are only eligible if explicitly allowed

Required Documentation

To apply for an STRP permit in Nashville, you must prepare and submit the following documents:

1. Detailed floor plan certified by a state-licensed architect, engineer, or home inspector
2. Proof of liability insurance coverage of at least $1 million per occurrence
3. Notarized affidavit confirming the accuracy of all provided information
4. Proof of notification to adjacent property owners (either signed statements or mailed notification letters)
5. Homeowners Association (HOA) compliance statement verifying the STRP does not violate any HOA agreements
6. Responsible party information (must be someone who resides within 25 miles of the STRP)
7. Proof of payment of all taxes due (property taxes and, for renewals, all applicable room, occupancy, and sales taxes)

For owner-occupied STRPs, you must also provide four documents proving residence, such as:

1. Tennessee driver's license
2. Voter registration
3. Tax forms
4. Insurance documents showing the property as your primary residence

Application Process

The STRP permit application process in Nashville involves several steps:

1. Gather all required documentation as outlined above
2. Submit your application through the Metro Codes Department's online portal
3. Schedule an inspection with the Fire Marshal's office after your application is generated
4. Meet with a zoning examiner to review your application
5. Pay the permit fee ($313.00 for both types of permits) following approval
6. Post your permit number on all your short-term rental listings

The entire process typically takes several weeks, depending on the completeness of your application and the current volume of applications being processed by the Metro Codes Department.

Renewal Requirements

STRP permits in Nashville must be renewed annually. Operating with an expired permit will result in a one-year prohibition from obtaining a new permit for that property. When renewing, you must:

1. Provide proof of payment of all applicable taxes
2. Confirm that all information on file remains accurate
3. Pay the renewal fee
4. Maintain compliance with all STRP regulations

Operational Requirements

Once permitted, STRPs must adhere to specific operational requirements:

1. Install functioning smoke alarms throughout the property
2. Adhere to maximum occupancy limits
3. Have a responsible party available 24/7 to address any issues
4. Comply with all applicable building and fire safety codes
5. Remit all required business, sales, and hotel occupancy taxes
6. Maintain the property in compliance with all health and safety regulations

Enforcement and Penalties

Nashville takes enforcement of short-term rental regulations seriously. The penalties for non-compliance include:

1. Fines of $50 per day for each day of operation without a valid permit
2. Potential revocation of your STRP permit
3. One-year prohibition from obtaining a new permit if your permit is revoked
4. Legal action for persistent non-compliance

The Metro Codes Department actively monitors short-term rental platforms and investigates complaints submitted through hubNashville. They employ various enforcement methods, including working with private firms like Host Compliance to identify non-compliant properties.

It's worth noting that making false complaints against short-term rental operators is punishable as perjury under Tennessee state law (TCA § 39-16-702).

For additional questions or clarification on the STRP permit process, you can email the Metro Codes Department at strp@nashville.gov. The department is committed to helping property owners navigate the permitting process while ensuring all short-term rentals in Nashville operate safely and legally.

Required Documents for Nashville, Tennessee Short-Term Rentals

Securing a short-term rental permit in Nashville requires thorough documentation. Here's a comprehensive list of the required documents you'll need to prepare for your application:

Floor Plan
A detailed floor plan of the entire dwelling must be submitted on letter-sized paper (8.5" x 11"). This plan needs to include all rooms with walls, doors, windows, and smoke detectors identified for each floor of the house. For single and two-family dwellings, the floor plan must be certified by a state-licensed architect, engineer, or home inspector. This document helps ensure the property meets safety standards and occupancy limits.

Proof of Liability Insurance
You must provide evidence of homeowner's fire, hazard, and liability insurance. The liability coverage must have limits of not less than one million dollars per occurrence. This insurance protects both you and your guests in case of accidents or damages during a stay.

Notarized Affidavit
An affidavit confirming that all information provided with the application is true and accurate must be notarized. This document holds you legally accountable for the information submitted. If you're using a property manager or rental company to apply on your behalf, you'll need to complete a separate notarized affidavit authorizing the third party.

Proof of Notification to Adjacent Property Owners
You must notify adjacent property owners of your intent to operate a short-term rental. This can be done through either signed statements from neighbors or documentation of mailed notification letters. This requirement promotes transparency with neighbors who may be affected by your rental operation.

Proof of Tax Payment
Evidence showing payment of all taxes due is required, including property taxes. For permit renewals, you'll also need to show payment of all applicable room, occupancy, and sales taxes required by state law or the Metropolitan Code. This ensures you're in good standing with local tax authorities.

HOA Compliance Statement
Applicants must provide a statement confirming that operating the proposed STRP would not violate any Homeowners Association agreement, bylaws, Condominium Agreement, Covenants, Codes, and Restrictions, or any other agreement governing and limiting the use of the property. This prevents potential legal conflicts with community associations.

Responsible Party Information
You must designate a responsible party who resides within 25 miles of the STRP. This person will be the point of contact for addressing any issues that may arise during guest stays. Their contact information must be provided as part of your application.

Proof of Residence (Owner-Occupied Permits Only)
For owner-occupied permits, you must submit four documents proving that you permanently reside at the property. Acceptable documents include:

• Tennessee driver's license
• State of Tennessee identification cards
• Davidson County voter registration card
• Pay stub
• Work ID or badge
• IRS W2 form
• Bank statement

Note that utility bills are not accepted by Metro Codes as proof of residence. These documents establish your primary residence status, which is essential for qualifying for an owner-occupied permit.

Application Submission
Once you've gathered all required documents, you'll need to compile them into a single PDF file and email it to strp@nashville.gov. After your application has been generated, if your property is in a multifamily structure (3 or more dwellings on the property), you'll need to schedule an inspection with the Fire Marshal's office by emailing fm.inspections@nashville.gov.

Permit Fee Payment
Upon approval of your application, you'll need to pay a $313.00 permit fee. Instructions for online payment will be emailed to you (a 2.3% processing fee applies to all credit card payments). Alternatively, you can pay with exact cash or check in person at the Metro Codes Department.

Remember that you are not authorized to list your property for rent on any platform until you receive your permit. Operating without a valid permit can result in significant penalties and may affect your ability to obtain permits in the future.

Nashville, Tennessee Short-Term Rental Taxes

Operating a short-term rental in Nashville comes with significant tax obligations. Understanding these taxes is crucial for maintaining compliance and properly budgeting for your rental business. Here's a comprehensive breakdown of the tax requirements for Nashville short-term rental operators:

Sales Tax

Short-term rental operators in Nashville must collect and remit sales tax on their rental income. The current Tennessee state sales tax rate is 7%, while the local sales tax rate is capped at 2.75%. These taxes apply to the rental fees charged to guests staying at your property for less than 30 consecutive days.

For rentals booked through platforms like Airbnb, VRBO, or other short-term rental marketplaces, these platforms now collect and remit the sales tax on your behalf. However, for direct bookings made outside these platforms, you as the property owner are responsible for collecting and remitting these taxes to the appropriate tax authorities.

Hotel Occupancy Tax

Nashville imposes a hotel occupancy tax (also known as transient occupancy tax) on short-term accommodations. This tax applies to stays of less than 30 days and is overseen by the Office of the Treasurer.

The combined total of state and local taxes on room rentals in Nashville can reach up to 15.25% plus an additional flat fee. This substantial rate reflects Nashville's status as a major tourism destination.

Effective January 1, 2021, short-term rental marketplaces that facilitate rentals for less than 30 continuous days must remit the occupancy tax to the Tennessee Department of Revenue. For bookings made directly with the property owner (not through a marketplace), the owner is responsible for collecting and remitting this tax directly to the local government.

Business Tax

All short-term rental operators in Nashville must register for and pay business taxes. This applies to the overnight rental of real property for less than 180 days. To comply with this requirement, you'll need:

• A county business tax registration
• A city business tax registration

These registrations signify your compliance with local business tax laws and are mandatory for legally operating a short-term rental in Nashville.

Franchise and Excise Tax

For-profit entities operating short-term rentals in Tennessee may also be subject to Franchise and Excise (F&E) taxes. All for-profit, foreign, and domestic entities chartered, qualified, or registered in Tennessee or doing business in the state must file an F&E tax return and pay at least the minimum tax.

However, there are possible exemptions for short-term rentals that may apply, depending on your business structure and operations. Consulting with a tax professional is advisable to determine if any exemptions are applicable to your situation.

Tax Deductions for Short-Term Rental Operators

Operating a short-term rental in Nashville also offers numerous tax deduction opportunities that can significantly reduce your taxable income:

• Depreciation: You can spread the cost of your property (excluding land) and significant improvements over 27.5 years for residential properties. Furniture, appliances, and other items can often be depreciated over shorter periods, providing larger annual deductions.
• Property Taxes: The property taxes you pay on your short-term rental are fully deductible as a business expense, which can be substantial in desirable vacation areas like Nashville.
• Cleaning and Supplies: The frequent turnover in short-term rentals necessitates regular cleaning and restocking of supplies. These expenses, including cleaning services, toiletries, kitchen supplies, and cleaning products, are fully deductible.
• Repairs and Maintenance: Costs to keep your property in good working order or restore it to its original condition are fully deductible in the year they are incurred. This includes plumbing repairs, HVAC maintenance, and appliance repairs.
• Mortgage Interest: If you have a mortgage on your short-term rental property, the interest paid is deductible as a business expense.
• Insurance Premiums: The cost of insurance coverage for your short-term rental, including liability insurance and property insurance, is fully deductible.
• Utilities: Expenses for electricity, water, gas, internet, cable TV, and other utilities provided for your guests are deductible business expenses.

It's important to note that if you use your property personally in addition to renting it out, you'll need to allocate expenses proportionally based on personal versus rental use. The IRS 14-day/10% rule also applies: if you rent your property for 14 days or less annually, you don't report the income but can't deduct rental expenses.

Maintaining meticulous records of all income and expenses related to your short-term rental is essential for maximizing deductions while ensuring compliance with tax regulations. Given the complexity of tax laws affecting short-term rentals in Nashville, consulting with a tax professional familiar with local regulations is highly recommended.

Tennessee Wide Short-Term Rental Rules

Nashville short-term rental operators must not only comply with local regulations but also adhere to Tennessee's statewide rules that govern the short-term rental industry. Understanding these broader regulations is essential for legal operation throughout the state.

The Short-Term Rental Unit Act

In May 2018, Tennessee enacted the "Short-Term Rental Unit Act" (SB1086), which established the framework for short-term rental regulations across the state. This legislation defines a short-term rental unit as "a residential dwelling, including a single-family dwelling or a unit in a multi-unit building, such as an apartment building, condominium, cooperative, or time-share, that is rented wholly or partially for a fee for a period of less than thirty (30) continuous days."

The Act provides significant protections for short-term rental operators by limiting how local governments can regulate these properties. Specifically, the law states that local governing bodies in Tennessee cannot:

• Prohibit the use of property as a short-term rental unit
• Restrict the use of or otherwise regulate a short-term rental unit based solely on its classification, use, or occupancy

However, local governments retain the authority to enact laws that regulate short-term rental properties for the purpose of protecting public health and safety, provided these regulations use the least restrictive means possible.

Legacy Clause Protection

One of the most important provisions of the Tennessee Short-Term Rental Unit Act is what's commonly referred to as the "Legacy Clause" (formerly known as the "Grandfather Clause"). This provision states that any ordinance, regulation, rule, or requirement that prohibits or regulates the use of property as a short-term rental unit does not apply to properties that were being used as short-term rentals prior to the enactment of such regulations.

This legacy protection remains in effect until:

• The property changes ownership
• The property ceases to operate as a short-term rental for 30 continuous months
• The property violates general local laws at least three times

In Nashville, this legacy clause has significant implications. Rental operators who had permits before certain restrictive ordinances were passed (such as BL2017-608) can maintain their permits without being subject to the newer restrictions.

Statewide Safety Requirements

Across Tennessee, all short-term rental operators must comply with basic safety requirements, including:

• Maintaining liability insurance of at least $500,000 (unless provided by the rental marketplace)
• Installing and maintaining fire sprinklers, smoke alarms, and carbon monoxide detectors in the property

Business and Tax Obligations

Tennessee law requires short-term rental operators throughout the state to:

• Obtain valid city and county business licenses
• Collect and remit room/hotel occupancy taxes
• Pay applicable sales taxes
• Register for business tax as Classification 3 businesses based on gross rental receipts

For Nashville hosts, understanding these statewide regulations provides important context for local requirements and offers certain protections that may supersede some local restrictions. However, it's essential to remain in compliance with both state and local regulations to avoid penalties and maintain your ability to operate legally in Tennessee's vibrant short-term rental market.

Does Nashville, Tennessee Strictly Enforce STR Rules?

Nashville has earned a reputation as a city that takes its short-term rental regulations very seriously. Unlike some municipalities that have lax enforcement, Nashville actively monitors compliance and pursues violations with notable diligence.

Nashville's enforcement of short-term rental regulations is notably strict compared to many other tourist destinations. The city actively searches platforms like Airbnb and VRBO to identify non-compliant listings and responds promptly to neighbor complaints. According to discussions on Reddit, Nashville's permit requirements are "strictly enforced," with many hosts reporting firsthand experiences with the city's vigilant approach.

The Metro Codes Department employs a proactive strategy, with dedicated staff monitoring rental platforms and investigating reports submitted through Hub Nashville or to local council members. This approach stands in contrast to cities that rely solely on complaint-based enforcement.

Nashville's enforcement mechanism includes regular verification of permits and swift action against unauthorized operations. The city imposes significant penalties for non-compliance, including:

• Fines of $50 per day for operating without a valid permit
• Potential revocation of permits for repeated violations
• One-year prohibition from obtaining a new permit if caught operating illegally

In a notable enforcement action in 2020, Nashville shut down approximately 100 short-term rentals after determining that Metro Code Enforcement had issued those permits by mistake. This demonstrates the city's commitment to enforcing its regulations, even when the initial error was on the government's side.

In conclusion, Nashville maintains a strict but structured approach to short-term rental regulation. While the city is not overtly hostile to the concept of short-term rentals, it demands compliance with its established framework and actively enforces its rules. For potential hosts, the message is clear: operate legally with proper permits or don't operate at all.

How to Start a Short-Term Rental Business in Nashville, Tennessee

Starting a short-term rental business in Nashville requires careful planning and adherence to local regulations. Here's a comprehensive step-by-step guide to help you navigate the process successfully:

Research Nashville's Short-Term Rental Regulations

Before investing in a property, thoroughly understand Nashville's short-term rental laws. Determine if your property (or potential property) is eligible for an owner-occupied or non-owner occupied permit by reviewing the city's zoning requirements. Nashville's zoning laws dictate where STRPs can operate, with owner-occupied STRPs allowed in all residential districts (except NS zones) and non-owner occupied STRPs only permitted in certain non-residential zones. Review the Metro Nashville District Land Use Table to confirm zoning eligibility for your property.

Tip: Consider consulting with a local real estate attorney who specializes in short-term rentals to ensure you fully understand the current regulations, as they can change over time.

Determine Your Permit Type

Nashville offers two types of STRP permits: owner-occupied and non-owner occupied. Owner-occupied permits are for properties where you permanently reside, while non-owner occupied permits are for investment properties where you don't live. Each has specific eligibility criteria and restrictions. Remember that new non-owner occupied permits are only issued in certain non-residentially zoned areas, and no new permits are issued in AR2A, R, RS, or RM zones.

Tip: If you're purchasing a property specifically for short-term rental purposes, focus on areas where non-owner occupied permits are still being issued to avoid future regulatory challenges.

Prepare Required Documentation

Gather all necessary documents for your permit application, including:

• Detailed floor plan certified by a state-licensed architect, engineer, or home inspector
• Proof of liability insurance (minimum $1 million per occurrence)
• Proof of notification to adjacent property owners
• HOA compliance statement (if applicable)
• Responsible party information (must reside within 25 miles of the STRP)
• Proof of payment of all taxes due

For owner-occupied permits: four documents proving residence (Tennessee driver's license, voter registration, tax forms, etc.)

Tip: Create a checklist and start gathering these documents early, as some may take time to obtain, particularly the certified floor plan and proof of insurance.

Submit Your Permit Application

Once you've gathered all required documentation, submit your application to the Metro Codes Department. It's highly recommended to arrive at the Development Services Center by 7:30 am to secure a spot in the queue to meet with a zoning examiner. After your application has been generated, if your property is in a multifamily structure, you'll need to schedule an inspection with the Fire Marshal's office.

Tip: Compile all your documents into a single organized file and make copies of everything. This will streamline the application process and provide backup in case anything gets misplaced.

Schedule and Pass Inspections

After submitting your application, schedule the required inspections to ensure your property meets all safety requirements. This includes having functioning smoke alarms, proper emergency exits, and adherence to occupancy limits. The Fire Marshal's office will conduct inspections for properties in multifamily structures.

Tip: Conduct a pre-inspection walkthrough using the city's checklist to identify and address any potential issues before the official inspection.

Pay Permit Fee and Receive Approval

Upon approval of your application, pay the permit fee of $313.00. You can pay online (a 2.3% processing fee applies to credit card payments) or in person with exact cash or check at the Metro Codes Department. Once payment is processed, you'll receive your STRP permit.

Tip: Set a calendar reminder for your annual renewal to avoid permit expiration, which could result in a one-year prohibition from obtaining a new permit.

Set Up Tax Collection and Remittance

Register for all applicable taxes, including sales tax, hotel occupancy tax, and business tax. Establish a system for collecting and remitting these taxes on time. While platforms like Airbnb may collect some taxes on your behalf, you're ultimately responsible for ensuring all tax obligations are met.

Tip: Consider working with a local accountant familiar with short-term rental tax requirements to ensure compliance and maximize potential deductions.

Prepare and Furnish Your Property

Create a welcoming space that appeals to Nashville visitors. Install keyless entry locks for contactless check-in, furnish your home with modern appliances, and style your space with elevated, locally inspired furniture and decor. Stock your property with essential amenities and create a comprehensive welcome book for guests.

Tip: Research other successful Nashville Airbnbs to understand what amenities and design elements are most appreciated by guests visiting Music City.

Assemble a Local Support Team

Build a network of reliable local service providers, including housekeepers, maintenance personnel, plumbers, electricians, and landscapers. Having a trusted team is essential for maintaining your property and addressing any issues that arise during guest stays.

Tip: Develop relationships with multiple service providers for each category to ensure you have backup options when your primary contacts are unavailable.

Create and Optimize Your Listing

Develop compelling listings on platforms like Airbnb and VRBO that showcase your property's best features. Take high-quality photos, write detailed descriptions, and highlight nearby attractions. Remember to include your permit number in all listings as required by Nashville regulations.

Tip: Consider hiring a professional photographer to capture your property in the best light, as quality images can significantly impact booking rates.

Implement a Strategic Pricing Model

Research the Nashville market to determine competitive pricing for your property. Consider factors such as location, amenities, size, and seasonal demand. Implement dynamic pricing to maximize revenue during high-demand periods like music festivals, sporting events, and holidays.

Tip: Utilize pricing tools and analytics software designed for short-term rentals to optimize your rates based on market conditions and maximize your occupancy and revenue.

Monitor Compliance and Stay Updated on Regulations

Nashville's short-term rental regulations can change, so stay informed about any updates or amendments to local ordinances. Regularly review your operations to ensure ongoing compliance with all requirements.

Tip: Join local short-term rental associations or online forums where hosts share information about regulatory changes and best practices for operating in Nashville.

By following these steps and maintaining strict compliance with Nashville's regulations, you can establish a successful and legally compliant short-term rental business in Music City.

Who to Contact in Nashville, Tennessee about Short-Term Rental Regulations and Zoning?

Navigating Nashville's short-term rental regulations can be complex, but several official resources and community groups are available to help hosts understand and comply with local requirements.

Metro Codes Department

The primary point of contact for all short-term rental inquiries in Nashville is the Metro Codes Department. This department oversees the permitting process, handles compliance issues, and can answer questions about zoning and regulations.

• Email: strpquestions@nashville.gov
• Phone: 615-862-7190
• Physical Address: Metro Office Building, 800 President Ronald Reagan Way, 1st Floor, Codes Department, Nashville, TN 37210
• Office Hours: Monday - Friday, 7:30 a.m. to 4:00 p.m. (Closed on weekends)

For the most efficient service when visiting in person, it's highly recommended to arrive by 7:30 a.m. to secure a spot in the queue to meet with a zoning examiner.

Metro Planning Commission

For questions specifically regarding zoning conditions, Specific Plans (SP), or Planned Unit Developments (PUD), contact:

1. Email: planningstaff@nashville.gov
2. Phone: 615-862-7190

Fire Marshal's Office

If your property is in a multifamily structure (3 or more dwellings on the property), you'll need to schedule an inspection with the Fire Marshal's office:

Email: fm.inspections@nashville.gov

When contacting any of these resources, be prepared with specific questions about your property's zoning, the type of permit you're seeking, or particular regulatory concerns. Having your property address and any existing documentation ready will help officials provide the most accurate and helpful information for your situation.

Remember that regulations can change, so maintaining regular contact with official channels and community groups is essential for staying informed about any updates or amendments to Nashville's short-term rental laws.