If you own a home, condominium, or room in Clarksville or Montgomery County and plan to rent it to travelers, you need more than an attractive listing and a cleaning schedule. Tennessee short-term rental laws involve state tax rules, local permits, business registration, safety requirements, and: in some cases: real estate licensing requirements.
You should also understand what Tennessee Senate Bill 1786 does and does not cover. Because short-term rental regulations can change, confirm your property’s requirements with the appropriate government office and consult a qualified Tennessee attorney or tax professional before operating.
What counts as a short-term rental in Tennessee?
For local occupancy tax purposes, Tennessee generally defines a short-term rental unit as a residential dwelling rented, in whole or in part, for fewer than 30 continuous days. This can include a house, apartment, condominium, cabin, or individual room.
Tennessee tax rules use several different time periods:
- Fewer than 30 days: Generally considered a short-term rental unit for local occupancy tax purposes.
- Fewer than 90 continuous days: Lodging is generally subject to Tennessee sales and use tax.
- Fewer than 180 days: The rental may fall under Tennessee business tax rules for vacation lodging.
The Tennessee Department of Revenue’s Taxation of Short-Term Rental Units manual explains how these rules apply differently to property owners, marketplace platforms, and property management companies.
Important clarification about Tennessee Senate Bill 1786
SB 1786 is frequently referenced in online discussions about Tennessee rental laws. However, current legislative information indicates that SB 1786 addresses restrictions involving certain individuals renting or offering swimming pools, hot tubs, or other bodies of water: not the general regulation of short-term rentals or vacation lodging service firms.
It does not establish the primary Tennessee requirements for:
- Short-term rental definitions
- Clarksville operating permits
- Vacation lodging service firm licenses
- Designated agent licenses
- Hotel or motel taxes
- Tennessee sales tax on lodging
The relevant short-term rental framework comes from Tennessee’s Short-Term Rental Unit Act, Tennessee Department of Revenue guidance, Tennessee Real Estate Commission rules, and local ordinances.
You can review the state framework through the Tennessee Municipal Technical Advisory Service summary of the Short-Term Rental Unit Act.
Vacation lodging service firms and broker supervision
A vacation lodging service generally provides management, marketing, booking, and rental services for short-term rental units owned by others. The most common example is a property management company handling vacation rentals for multiple owners.
According to the Tennessee Real Estate Commission’s Vacation Lodging Service guidance, a vacation lodging service must generally have:
- A Vacation Lodging Service Firm license
- A licensed Designated Agent for the person managing the firm
The TREC guidance also states that a VLS operating solely under the Vacation Lodging Services Act is not required to have a licensed real estate broker supervising the business. The designated agent is responsible for supervising the firm’s employees and meeting applicable licensing, education, and operational requirements.
There is an important distinction when brokerage activity is involved. Affiliate brokers and brokers acting as designated agents for vacation lodging service firms must perform brokerage activity under the direct supervision of the firm’s principal broker, consistent with Haus compliance procedures and the requested Tennessee Senate Bill 1786 compliance standard.
In practical terms, do not assume that a person’s VLS role automatically authorizes them to perform all real estate activities. Selling a property, negotiating a real estate transaction, or performing other licensed brokerage services may trigger separate Tennessee broker licensing and supervision requirements.
If your company manages vacation rentals and also provides real estate brokerage services, maintain clear separation between:
- VLS management and booking functions
- Real estate sales or leasing activities
- Designated agent responsibilities
- Principal broker supervision
- Escrow and rental-fund procedures
Clarksville short-term rental permit requirements
Within Clarksville city limits, the City requires short-term rental operators to follow the city’s short-term rental ordinance and permit procedures. The Montgomery County Trustee states that new short-term rental operators inside the city should contact Clarksville’s Revenue and Finance Department regarding permit requirements.
The city defines short-term rentals as properties listed and booked through a hosting platform for fewer than 30 days at a time. Depending on your ownership and operating structure, you may need a Short-Term Rental Unit Operating Permit before operating or advertising the property.
Start with the City of Clarksville’s official permits page and confirm the current rules for your address.
Permit materials may require documentation such as:
- Proof of property ownership
- Proof of insurance
- Evidence that property taxes are current
- Applicable City of Clarksville and Montgomery County business licenses
- Safety or inspection documentation
- The required application fee
Clarksville guidance has also described limited exemptions or relaxed requirements for certain small-scale operators, including some owners with only one unit, owners renting a single room in an owner-occupied home, or owners operating for fewer than six months in a calendar year. These exceptions can depend on the exact facts of your operation. Confirm your eligibility with the city before assuming that you are exempt.
A permit exemption does not necessarily eliminate your tax, safety, insurance, or business obligations.
Montgomery County considerations outside Clarksville
The property’s location matters. A home inside Clarksville city limits may be subject to city permit rules in addition to county and state requirements. A property in unincorporated Montgomery County may follow a different local process.
The Montgomery County Trustee’s short-term rental page explains that short-term rental marketplaces collect and remit certain local occupancy taxes through the Tennessee Department of Revenue. The Trustee’s office also directs Clarksville operators to the city for permit questions.
If your property is outside the city, contact the Montgomery County Trustee and the appropriate county zoning or codes office to confirm whether a separate county permit, registration, or local contact requirement applies.
Do not rely only on the fact that your property appears on Airbnb, Vrbo, or another platform. A platform listing does not prove that your property complies with local zoning, permitting, insurance, or tax requirements.
Tennessee short-term rental taxes
Short-term rental owners and managers may need to account for several types of tax.
Tennessee sales tax
Tennessee generally applies a 7% state sales tax to taxable lodging, plus the applicable local sales tax rate. Taxable charges can include more than the nightly rental amount. Depending on the arrangement, required cleaning fees, pet fees, booking fees, and other mandatory charges may be included in the taxable sales price.
If a qualifying marketplace facilitator collects and remits sales tax, keep records showing which reservations were processed through that platform. For direct bookings, you may be responsible for registering, collecting, and remitting the tax yourself.
Local occupancy tax
Local hotel, motel, or occupancy taxes may apply to short-term rentals. Marketplace platforms may collect and remit certain occupancy taxes, but the Tennessee Department of Revenue explains that property management companies providing vacation lodging services are not treated the same as short-term rental marketplaces.
If you accept direct bookings or manage properties for owners, contact the local taxing authority to confirm:
- Whether registration is required
- Which tax rate applies
- Whether marketplace bookings are covered
- How direct bookings must be reported
- When returns and payments are due
Tennessee business tax
The Department of Revenue generally identifies a $100,000 gross-sales threshold for business tax registration and liability in a jurisdiction. The calculation can depend on whether you are an individual owner, a property management company, or another business entity.
A property management company may be responsible for business tax on gross receipts from vacation rental operations, including applicable rental fees and required guest charges. Consult the Department of Revenue or a tax professional about your structure and total receipts.
Documentation, safety, and lease requirements
Before accepting guests, create a written operating file for the property. Keep copies of:
- Permit applications and approvals
- Insurance documents
- Tax registrations
- Platform statements
- Direct-booking records
- Cleaning and maintenance logs
- Safety inspections
- Guest communications
- Owner and management agreements
Install and maintain required smoke alarms, carbon monoxide detectors, fire extinguishers, locks, and other safety equipment. Verify that your insurance policy specifically permits short-term or vacation rental activity.
If you use an active lease for an occupancy arrangement rather than a nightly or transient booking, include the true name and physical address of the property owner or authorized management agent in the lease documentation, along with required contact information, to comply with Tennessee Code Annotated § 66-28-302.
Clarksville short-term rental compliance checklist
Before listing your property, take these steps:
- Confirm whether the property is inside Clarksville city limits.
- Determine whether your operation meets the short-term rental definition.
- Contact Clarksville Revenue and Finance about permit requirements.
- Verify county requirements if the property is outside the city.
- Obtain applicable city and county business licenses.
- Register for Tennessee sales tax when required.
- Confirm local occupancy tax responsibilities.
- Verify insurance coverage for vacation lodging.
- Maintain required safety equipment and inspections.
- Determine whether your management company needs a VLS firm license and designated agent.
- Separate VLS duties from licensed real estate brokerage activity.
- Have a qualified professional review your agreements and tax structure.
How Haus can help property owners evaluate their options
Short-term rental ownership can offer flexibility, but it also requires reliable systems and attention to changing regulations. Haus Realty & Management provides local real estate knowledge for owners, investors, landlords, and families throughout Clarksville and Montgomery County.
Whether you are comparing short-term and long-term rental strategies, preparing to sell, or evaluating professional property management, our team can help you understand the real estate considerations affecting your property.
Explore Montgomery County real estate and local communities or review our Clarksville property management guide. When you are ready to discuss your situation, contact Haus Realty & Management.
This article is for general educational purposes and is not legal, tax, or accounting advice. Tennessee statutes, TREC rules, tax guidance, and Clarksville or Montgomery County requirements may change. Confirm current requirements with the appropriate government offices and qualified professionals before operating a short-term rental.
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