Short-term rentals in Chattanooga, explained properly.

No person or entity may operate a short-term vacation rental without a short-term vacation rental certificate from the City's Development Review and Permitting Division. The certificate is issued for the specific site or address in the application, is valid for one year and must be renewed every year. Applications are made online through the City's OpenGov portal.

A homestay rental is the applicant's primary residence, meaning the applicant lives there at least 183 days a year. The applicant must be a natural person, or a business entity (such as a Tennessee LLC) whose applicant lives on the premises, and must show proof of ownership every year. Residency is proved at each annual renewal with a driver's license number, business records or other documents the City accepts.

City Code § 38-86(a) allows a homestay rental in any residential zone inside the Short-Term Vacation Rental Overlay District, and in any mixed-use, commercial or form-based code zone that allows single-unit detached homes or accessory dwelling units. The overlay district map is kept by the City Council Clerk; it was expanded in City Council District 1 (effective June 11, 2024) and District 5 (effective October 21, 2025). The City asks applicants to check eligibility on its GIS map before applying.

City Code limits new absentee rentals to mixed-use and commercial zones that allow a hotel, and to parcels of at least 20 acres in common ownership that allow residential uses. In the City's use table, hotels are permitted in the C-C, C-R, C-MU1 and C-MU2 zones. If zoning conditions on a property limit its allowed uses, an absentee rental is allowed only if a hotel or motel is allowed under those conditions. After a property is rezoned to a zone that allows absentee rentals, the owner must wait 18 months from the effective date before applying for an absentee certificate. The Board of Zoning Appeals cannot approve a rental in a zone where the use is not allowed.

Short-term vacation rentals may not exceed 25% of the total units in a multi-unit dwelling or multi-unit development. The City says the Board of Zoning Appeals cannot waive or exceed this 25% cap.

No more than five bedrooms may be made available for rental in one dwelling unit, and no more than five sleeping rooms on a site in the RN-1-6, RN-1-5 or RN-2 zones.

A short-term vacation rental may be the primary dwelling unit or an accessory dwelling unit (ADU), but not both structures on one lot. Garages, barns, sheds and other uninhabitable structures cannot be rented.

A short-term vacation rental may not operate in any capacity on property or in structures that are part of an Affordable Housing PILOT (payment in lieu of taxes) program.

The non-refundable application fee is $250 for a homestay certificate and $500 for an absentee certificate, and the same amounts are charged at each annual renewal, plus any transaction fees. The fee must be paid before the City reviews the application.

Applications are submitted under oath through the City's OpenGov portal with a code compliance verification form and documents such as the deed, proof of insurance and escape plans. Every application must name a short-term vacation rental agent. For absentee rentals, the City asks the Fire Marshal and a City building inspector to inspect the property before a certificate is issued. The whole process must be completed within 60 days of submitting, or the application can be rejected; the City says processing generally takes 30 days.

A certificate cannot be moved to another site, property or address. A change of ownership of the rental unit is allowed as long as the transferring owner or operator and the prior owners have not been subject to revocation for at least one year before the transfer. The City has a transfer application for new owners.

City Code says a renewal application must be submitted at least 30 days before the certificate expires, the application information must not have changed, and the property must not have had more than two documented violations tied to the rental in the past certificate period. The City's page says renewals can be started 30 days before expiration through the OpenGov account, not by filing a new application. A certificate more than 30 days past its expiration date cannot be renewed.

Maximum occupancy is two people per bedroom of up to 210 square feet, plus two more. For bedrooms over 210 square feet, the bedroom's area divided by 70 square feet sets its occupant load, plus two more. The maximum must be posted inside the rental. The City can also condition a certificate to a number of rooms, operating days or hours, signage or other limits.

The owner may not take payment for stays of less than 24 hours.

Every short-term vacation rental, homestay or absentee, must designate one short-term vacation rental agent on its application: the owner, or a person over 18 who meets local and state requirements. The agent must be available 24 hours a day, seven days a week, appear at the rental within two hours of being notified by the City of a problem, accept notices of violation and monitor the rental. Failing to appear for two or more complaints may lead to penalties.

The current certificate must be posted in a conspicuous place inside the rental, along with the maximum occupancy and the name and phone number of the owner or agent. The City issues a certificate number that must appear on every listing, platform or material used to advertise the rental. Owner and agent contact information must also be posted on a public website or as the City decides.

The rental must have adequate on-site parking, as the City decides based on the number of guests, how often the rental operates and on-street parking. As a general rule, guests may not park on any vegetated area of the property.

No on-site signs are allowed, except that rentals on at least five acres whose home is not visible from the street may have directional signs at least 50 feet from the street. Off-site signs are limited to City-required signs and signs for designated guest parking, no larger than three square feet.

Each rental must have working smoke detectors as determined by the Fire Marshal and other life safety equipment required by law, and must meet zoning, building, health and life safety laws. Guests must follow the City's noise restrictions, waste rules and City Code § 25-69.

The City's short-term rental article does not override private agreements or covenants by homeowner associations or developers that restrict uses, so an HOA can still restrict or bar short-term rentals.

The premises must not have been found in violation of any City Code provision by City Court within the six months before the certificate application. False statements on an application are grounds for denial, revocation or suspension.

The City may revoke a certificate, after notice and a public hearing, once the property has three documented violations of City Code or state law caused by operating the rental with no appeal rights left. A revoked holder cannot apply for a new certificate on the same property for one year. A renewal is denied after three or more documented violations in the past certificate period, and the City may deny renewal after one or two.

A denied applicant may appeal to the Board of Zoning Appeals and then to Chancery Court; appeals must be filed within 60 days of the denial or revocation. The applicant must attend the hearing or the appeal is automatically denied, and an applicant still denied after the hearing must wait 12 months to reapply.

The City of Chattanooga charges a 4% occupancy privilege tax on the price charged for stays of less than 30 days. The certificate holder is responsible for collecting and remitting all applicable room, occupancy and sales taxes.

Hamilton County charges a 4% occupancy privilege tax (Private Acts of 1980, Chapter 905) on the price charged for stays of less than 90 days, in addition to the City tax.

The Hamilton County Trustee collects the County and City of Chattanooga occupancy taxes. For bookings you take directly, file the combined County and City return and pay by the 20th of the month after you collect, even in months with no tax due; the operator may keep 2% of the City tax as an accounting fee when filing on time. Booking platforms collect occupancy taxes on bookings made through them and pay them to the Tennessee Department of Revenue.

The local sales tax rate for addresses in the City of Chattanooga is 2.25%, on top of the 7% state rate (9.25% in total), filed with the Tennessee Department of Revenue.

Renting a home, cabin, condominium or room for lodging is subject to Tennessee's 7% state sales tax and the local sales tax rate where the rental is located. The Tennessee Department of Revenue administers both. Sales tax is charged on the full price of the stay, including required fees such as cleaning and booking fees.

Tennessee sales tax does not apply to a room or home rented to the same person for 90 or more continuous days. Local occupancy taxes apply only to short-term rental units rented for 30 days or less and stop applying on day 31; for rental agreements made, renewed or amended on or after July 1, 2025, occupancy tax collected on days 1 to 30 is not refunded.

The Tennessee Department of Revenue says property owners and property management companies with over $100 a month in taxable sales must register with the Department and collect and remit sales tax. If you list only through an online platform that is a marketplace facilitator, the platform collects and remits sales tax on those bookings and you should keep records showing the rentals went through it. Bookings you take directly, outside a platform, are your responsibility.

Online platforms that are marketplace facilitators collect and remit Tennessee sales tax on bookings made through them. Since January 1, 2021, short-term rental platforms have also collected local occupancy taxes on their bookings and paid them to the Department of Revenue, so the owner does not collect local occupancy tax on those bookings.

Many Tennessee cities and counties charge their own occupancy tax on short-term rental stays. For bookings you take yourself (not through a platform), you collect it and pay it directly to the local government where the rental is, not to the state. The Department of Revenue advises every owner, including those who rent only through platforms, to contact the local officials, because there may be local reports or requirements.