If you’re a Nashville property owner hoping to make a foray into the vacation market, then congratulations! Here are 5 Nashville short term rental laws you need to know.
The city was included in Forbes’ 2019 “10 Best Bang-for-the-Buck Vacation Destinations” list, and the projected U.S. vacation rental revenue for 2019 is over $57 billion, so this is an opportune time to break into the business. As you move forward in this exciting venture, it’s important to keep the following short-term rental rules and regulations in mind.
1. Owners of short-term rental properties are legally required to obtain an operating permit from the Metro Codes Department before they can post on websites such as Airbnb, VRBO and HomeAway. Never list a property or unit online until you have received a permit, or you will be ineligible to apply for a permit for the next year. Even if you think you’re just being proactive and getting ahead of the game by posting your space online, don’t do it!
If the city catches wind of any illegally operating Airbnb vacation rentals, the property owners are sent an initial violation notice and are subsequently fined $50 day.There are two types of STRP permits in Nashville: owner-occupied and non-owner occupied.
Owner-occupied permits are for people who permanently reside at the property. Entities like LLCs, corporations, trusts, partnerships, and joint ventures are ineligible for owner-occupied permits. The permit includes the rental of an entire dwelling unit to a single party of individuals, or if only part of the unit is being rented, it includes at least one sleeping room and a bathroom. The documentation of primary residence address must match the deed as recorded with the Davidson County Clerk's office. Only one permit can be issued per lot in single-family and two-family zoning districts, and the property ownership of two-family units cannot be divided.
Non-owner-occupied permits are—yep, you guessed it—properties not occupied by the owner as a principal residence. Rentals are limited to a single party of individuals, and ownership information on the application must match the deed as recorded with the Davidson County Clerk's office. New non-owner occupied permits aren’t allowed in residential zones. Existing permit holders in these zoned districts are grandfathered under Tennessee law and may be eligible for permit renewal, but they won’t be allowed to transfer those permits when they sell their properties.
The latest hot topic in the Nashville short-term rental laws and general industry is the new Tennessee law BL2019-1633, which eliminates multi-family zoning from the list of non-owner occupied permit zones. The bill limits new non-owner-occupied rentals to commercial areas of Nashville — effectively barring them in residential zones. The ban will officially take effect October 1, 2019, so those currently in the process of building projects can finish their developments. Short-term rental properties with live-in owners won't be affected.
2. A short-term rental property is legally defined as a residential dwelling unit with a maximum of four sleeping rooms. This property must be used or advertised for transient occupancy by guests. These units cannot be rented out to the same occupant for more than 30 consecutive days.
3. There is a maximum number of 12 occupants for short-term rentals, and the principal renter of this unit must be at least 21 years old. The permit holder is responsible for the guests of the property, and all visitors need to abide by the city’s applicable noise restrictions and waste management provisions. Short-term rental operators cannot be compensated by a guest who occupied the unit for less than 24 hours.
4. If the property’s ownership changes, the permit will be cancelled. You’re in charge of renewing your permit before it expires, which is 365 days after its initial issue date.
5. Owners are required to collect and remit all hotel occupancy taxes as well as sales tax. In addition, depending on the property’s revenue, you may be required to obtain a business tax license. The chart below serves as a general guide, but for more specific information, click here.
If you’re overwhelmed by these rules and regulations, we’re here for you! Chady Property Management is a seamless turn-key vacation rental property management for Airbnb, VRBO, Bookings.com, and more.
We can help you get the right permit and provide you with many other services, including property syndication, cleaning, and tax management. Reach out to us today to learn more or get started.