Short-term rentals in Knoxville, explained properly.

It is unlawful to operate or advertise any short term rental unit in the city without an operating permit. Applications go to the Business License & Tax Office, which issues or denies a complete application within 14 business days. The permit is valid for one calendar year from issuance. Operating or advertising without a permit is a public safety hazard and can be cited at $50 per day.

A Type 1 permit can be issued only to an owner who is a natural person (not a company), and the property must be the owner's principal residence, except that an owner of both sides of a legal duplex can get one permit for either side if they live on one side. A person can hold only one Type 1 permit in the city. If there is an accessory dwelling on the property, the permit covers either the main dwelling or the accessory dwelling, not both. The owner does not have to be present during a stay. Ownership is shown by the recorded deed and residency by at least two listed documents (vehicle registration, driver's license or state ID, children's school registration, voter registration card, or W-2 mailing) showing the rental address.

A Type 2 permit can be issued to an owner or a lessee, and to a person or an entity. A person or entity can hold only two Type 2 permits in the city. A lessee must provide the owner's signature acknowledging the owner's responsibility for the rules. The Code lists the Town Center District (TC-1), all South Waterfront Districts except SW-1, all Cumberland Avenue Corridor Districts and the Central Business District (C-2) as nonresidential districts, and says the list is not limited to those. The FAQ adds that the zoning must still allow residential use.

The Code defines a residential district as a zoning district whose principal permitted uses include residential uses, and lists as residential all districts in Appendix B, Article IV, Section 2.1 of the Knoxville Code, the planned residential districts RP-1, RP-2 and RP-3, the Traditional Neighborhood Development District (TND-1) and the Old Sevier and Scottish Pike South Waterfront District (SW-1). A nonresidential district is any other district that allows residential uses. This site did not read the Zoning Code district list itself, so it makes no claim about any particular district or address; look up the zoning on the KGIS map and confirm with the Business License & Tax Office or Knoxville-Knox County Planning.

A Type 3 permit let operators who had listed and rented a unit before March 1, 2017 keep renting in residential districts without living there. It had to be obtained within 30 days of the article's effective date, expired after one year and cannot be renewed, and the Code says no Type 3 permits will be issued after that window. The City FAQ says existing rentals that did not qualify must apply under Type 1 or Type 2 and may not be eligible, depending on zoning.

The City FAQ (last updated October 2022) gives new-application fees of $70 for a Type 1 permit and $120 for a Type 2 permit, and a $50 annual renewal for both; the $50 renewal fee is also in the Code. City and County business licenses are also required, at $15 per jurisdiction. Check the current amounts with the Business License & Tax Office, since the FAQ is dated.

An application to the Business License & Tax Office must include an acknowledgement of the rules, an affidavit that the required smoke alarms, carbon monoxide detector and fire extinguisher are installed, the owner's details and signature if a lessee applies, a 24/7 local contact person, owner information (and Tennessee Secretary of State good standing if the owner is a business entity), a site plan and floor plan showing bedrooms and off-street parking, and an indemnification agreement. The City and County business licenses are also part of the application packet.

For a Type 1 permit, the owner must send the City's neighborhood notice form by first-class mail or hand delivery, within 48 hours of submitting the application, to the owners of adjacent properties (those that abut, directly across the street or alley, or diagonally across the street or alley) and to any existing neighborhood organization, and report the names and addresses to the Business License & Tax Office.

No permit may be sold, lent, leased or transferred for value. A Type 1 permit is personal to the owner and ends immediately when the property is transferred. A Type 2 permit may move with the sale of a majority of a company's stock or membership interests, or of the business or substantially all its assets, with no value allocated to the permit, after written notice to the Business License & Tax Office and approval of the new holder's application. An unauthorized transfer voids the permit and can be cited.

Type 1 and Type 2 permits can be renewed each year if a $50 renewal fee is paid no later than 14 business days before the permit expires, unless the permit has been suspended or revoked. After a permit expires the right to renew is lost and the operator must reapply. A renewed permit is good for one calendar year. The City says it sends each operator a renewal notice.

The number of transients may not exceed two per bedroom plus two additional, and the unit may never have more than 12 people at one time, counting guests and anyone who lives or otherwise uses the unit.

Each permit needs a local contact person (the owner, lessee or owner's agent) available 24 hours a day, seven days a week, who can physically respond within 45 minutes of a complaint and take remedial action.

During each stay the unit must have a UL 217 smoke alarm inside each sleeping room, outside and within 15 feet of sleeping rooms and on each story (including basements), a carbon monoxide detector within 15 feet of all bedrooms, and a working fire extinguisher. The application includes an affidavit; equipment is subject to verification or inspection. The City FAQ says no inspection is generally required before the permit is issued.

It is unlawful to advertise a short term rental unit without the operating permit number clearly displayed on the advertisement, in any forum, online or offline.

Neither the Code nor the City FAQ sets a cap on the number of nights a unit can be rented per year. The permit holder does not have to be present during a stay, as long as the local contact can respond.

The City does not decide or enforce whether an HOA, covenant or lease allows short-term rental. Getting a permit does not override those private restrictions, so check your lease, condominium documents and covenants first.

The Code states that permits and the short-term rental use are not a grant of vested rights to continue indefinitely, and later City measures may change the terms or end some or all short-term rental uses, with or without a phase-out period, except where constitutional principles or binding state or federal law provide otherwise.

A unit operating or advertising without a valid permit is deemed a public safety hazard, and the operator, owner or local contact person may be cited $50 per day. Violating any other requirement of the article is a public nuisance and can be cited at $50 per day, to the operator, owner, occupants or local contact. The City contracts with a monitoring company to compare listings with permits and notifies non-compliant owners.

The City may revoke an operating permit if the applicant knowingly gave false information, if continuing the rental is a threat to public health or safety, or if the operator or unit violates the article or any other City ordinance. The FAQ adds that persistent complaints may result in revocation.

The City runs a 24-hour short-term rental hotline for complaints at 865-337-8275. The police non-emergency line is 865-215-7000.

The City's page says the State's short-term rental law took effect in January 2019 and that the City operates according to it, and reminds the public that a false complaint against a short-term rental provider is punishable as perjury (T.C.A. 13-7-604(c)). The current state statute text was not read from an official source for this page.

Knoxville levies a hotel occupancy privilege tax of 4% of the consideration charged by the operator, on each transient occupying a hotel, defined to include any place where lodging is furnished to transients for a stay of less than 30 days. The rate was set at 4% by Ord. O-136-2024 (November 2024). The City's FAQ, last updated October 2022, still says 3%; the Code is followed here. Short-term rental operators are responsible for the City occupancy tax.

Knox County's Code authorizes a hotel occupancy privilege tax on stays of less than 30 days, collected by the County Clerk, with the rate set each year by the county commission in increments of one-tenth of one percent and a maximum of 5% (3% if the County has not undertaken a tourist-related facility). The current County rate was not found on an official page, and whether and how it applies to rentals inside the City was not confirmed, so no County rate or combined total is stated. Ask the County Clerk.

The City FAQ says booking platforms collect the occupancy tax at the time of booking and pay it to the government. For bookings outside a platform, the operator adds the tax to the invoice and remits it to the City department of revenue by the 20th of the month after collection (Code), and the FAQ says a filing is needed even in months with no guests. The FAQ describes filing as quarterly on a City form; the Code says monthly. Confirm the schedule with the Business License & Tax Office, 865-215-2083.

The local sales tax rate for a Knoxville address (City Hall, 400 Main Street) is 2.25%, on top of the 7% state rate (9.25% in total), filed with the Tennessee Department of Revenue. The rate depends on the address; use the Department of Revenue lookup for yours.

The City FAQ says a City and a County business license are required to obtain the permit, at $15 per jurisdiction. The Code also says operators may need both for state gross receipts (business) tax purposes.

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.