Airbnb Rental Laws and Regulations Memphis Metro, TN

STR Defined

Shelby County, TN defines a short-term (Airbnb) rental property as “a residential dwelling unit¹, a portion of a dwelling unit or detached accessory dwelling unit containing not more than four sleeping rooms which are used and/or advertised for rent for transient² occupancy by guests. Shelby County, TN does not consider a residential dwelling unit or detached accessory unit rented to the same occupant for more than 30 consecutive days (including month-to-month leases) to be considered a short term rental property.

In addition, a residential dwelling unit or detached accessory unit rented to the same occupant in dwelling units owned by the federal government, the state or any of their agencies or political subdivisions, facilities licensed by the state as health care facilities including temporary family healthcare structures, campgrounds, bed and breakfast establishments, boarding houses, hotels and motels shall not be considered short term rental property.

• Primary website for Shelby County STR Regulations

Licensing Requirements & Fees

A short term rental permit application is required by the county and must be applied for electronically or in writing by the owner of the property. A non-refundable application fee of $100 of an original application will be due to the county clerk’s office and will expire in 365 days. After 365 days, the permit application must be submitted again but at the renewal fee price of $50.

• View the Permit Application
• The county clerk’s office reserves the right to deny, suspend, or revoke permits.
  • View compliance and revocation regulations
• STR permit applications that have been denied will be notified within 15 days of the completed application and will include information on requesting an appeal to the short term rental appeals board.
  • Applicants must make the appeal within 10 days after receipt of the denial from the county and the board will address the appeal at the next scheduled meeting, or within 45 days of their receipt of the appeal if there is no meeting scheduled before that date.

LLC Ownership Allowed

• Shelby County, TN does allow entities to operate a short term rental property but only with the owner of the property having obtained a short-term (Airbnb) rental property permit issued by the county clerk’s office.

Owning multiple short-term (Airbnb) rental properties (including within the same property)

• Any owner of more than one short-term rental property shall be required to obtain a permit for each short-term rental property. If more than one Airbnb rental property exists within a dwelling, each short-term rental property, as defined herein, shall be treated as one unit, and a permit shall be required for each unit.

Any advertising or description of a short-term rental property on an internet website, mobile application, or another hosting platform must display a permit number for the short-term rental unit issued by the county clerk’s office.

Taxes

Any short-term (Airbnb) rental unit found to be operated without a permit after the effective date of this article shall subject the owner of the property to a fine not to exceed $50.00 per day per unit, and any court costs.

• Hosting platforms may have existing agreements with the county to collect and pay taxes/fees directly to the county.
  • Ex: Airbnb occupancy tax collection and remittance in Tennessee 
  • A Tennessee state sales tax of 7% of the listing price will be included in Airbnb reservations and paid by the guest/transient.
  • A Memphis short term rental occupancy tax of 3.5% will be included in the listing price for Airbnb reservations. 
  • An additional $2 per bedroom per night for reservations under 30 nights will be charged as a Tourism Improvement District Assessment fee.
  • Airbnb Hosts located in these areas are responsible for assessing all other tax obligations, including state and city jurisdictions.
• Shelby County, TN collects a privilege tax of 5% (of the amount charged) for an occupant of a short term rental. This amount will be paid by the owners of short term rental properties.
  • However, if an agreement between a hosting platform and the county exists, the hosting platform may collect and pay this fee directly to the county. 
  • If a hosting platform/marketplace collects all your tax for you, you don’t need to file state sales tax returns in Tennessee.

The county clerk is entitled to retain a commission fee of 2.5% of the taxes collected.

Inspections

The permit holder shall meet all applicable requirements of the state and local building and fire safety codes and shall locate a five-pound fire extinguisher (rated for A, B and C fires) in each unit. Approved smoke alarms, meeting Underwriters Laboratory (UL) 217 standards, shall be installed as follows:

• In all sleeping areas
• In every room in the path of the means egress from the sleeping area to the door leading from the sleeping unit.

The permit holder shall meet all applicable requirements of the state and local building and fire safety codes, including, but not limited to, having approved carbon monoxide detectors meeting applicable state law standards installed on every habitable floor.

Responsible Agent

• A responsible party shall answer calls 24 hours a day for the duration of each short term rental period to address problems and complaints associated with the short term rental property.
  • The name and telephone number of each responsible party shall be conspicuously posted with the short term rental property unit. 
• Whenever any person is served with a citation, the person shall appear at the date and time set forth therein in general session court for hearing of the cause unless such violation has a forfeiture set therein. If such person fails to appear on the date and time, a default judgment shall be taken not to exceed $50.00 and costs for each offense.
• Complaints regarding short term rental properties must be resolved according to existing state law and county ordinances pertaining to public nuisances, vehicle and traffic, health and safety, and public peace, morals and welfare.
  • Owners shall immediately self-report, in writing or electronically, to the county clerk’s office all instances in which conditions or conduct on a permitted short term rental property resulted in a citation being issued and the disposition of such citation within 30 days of any final decision of the court. The clerk shall maintain records of citations and their disposition related to short term rental properties.

Zoning

• The city of Memphis is part of incorporated Shelby County, TN
  • Browse addresses in Shelby County, TN using this county zoning atlas. 

Tennessee State Regulations

• A short term rental property is constituted by lodging for less than 90 continuous days and is subject to sales tax.
  • If a property management company is used by the owner, the property management company must collect and remit the sales tax.
• The taxpayer must collect sales tax on the price plus any fees that the customer pays for the rental.
• Taxpayers must register and collect sales tax in the jurisdictions of the rental property location.
  • Additional registration must be filed for if the business expands into a new jurisdiction.

STR Management Considerations

• The principal renter of a short-term (Airbnb) rental property unit shall be at least 18 years of age.
• The short-term rental owner and the permit holder shall not receive any compensation for a short-term rental unit for a period of fewer than 24 hours.

Data Methodology

For this guide, we analyzed everything from public data sources, county assessor records, recently sold homes, data from the Bureau of Labor and Statistics, Airbnb data, and more. Chalet ran this data through machine learning models to derive the forecast models with the most accurate predictions.

Glossary

– ADR: Average Daily Rate

– Gross Yield = Median Revenue/Median Home Price

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Disclaimer: Short-term rental regulations are in a constant state of change. The below resource is updated when possible, but it should not be taken as legal advice. It is critical that you consult with your local lawyer to ensure you are taking the necessary steps to keep your business safe and legal.