Educational information only, not tax advice. Rules and figures change — confirm your situation with a qualified Tennessee tax professional before filing.
Tennessee · USA · Short-term rental taxes
Short-Term Rental Taxes in Tennessee
Tennessee STR income is subject to federal income tax, a 7% state sales tax on gross rental receipts, local occupancy taxes that vary by city and county, and a state business tax when annual gross receipts in a jurisdiction reach $100,000 or more.
The 30-Second Answer
- State Sales Tax: Tennessee imposes a 7% state sales tax on short-term rental receipts (stays under 30 days); most platforms like Airbnb and Vrbo collect and remit this as marketplace facilitators, so you typically don't file it separately for platform bookings.
- Local Occupancy Taxes: Counties and cities layer on additional lodging taxes — totals commonly range from 6.25% to 13.75% on top of state sales tax, and in high-tourism areas like Gatlinburg the combined burden can exceed 20%.
- Business Tax & Licensing: If your gross receipts in a single jurisdiction hit $100,000 or more, you must register for Tennessee Business Tax and obtain a business license; receipts between $3,000 and $100,000 require a minimal activity license from the county.
- Federal Income Tax: Net rental profit is reported on Schedule E (passive) or Schedule C (active/self-employment) of your federal Form 1040; Tennessee has no state income tax on wages or rental income, so there is no separate state income-tax return for individuals.
Deductions
What Tennessee STR Hosts Can Deduct
Ordinary and necessary expenses directly related to your rental activity reduce your federally taxable net income — keep receipts for everything.
If you also use the property personally, expenses must be allocated between rental and personal days using IRS rules (IRC §280A). Tennessee has no state income tax for individuals, so deductions apply at the federal level only. This is educational information, not tax advice.
Filing Calendar
Key Dates & Filing Calendar
Tennessee STR hosts face both federal and state filing obligations on different schedules — missing a deadline can trigger penalties.
Tennessee has no individual state income tax on rental income, so there is no separate TN income-tax return for most individual hosts. However, state sales tax and local occupancy tax returns have their own filing schedules set at registration.
Tennessee Department of Revenue, SUT-48 Short-Term Rentals – Reporting Requirements (revenue.support.tn.gov)
Federal Tax Treatment
Passive Rental vs. Active Business: Which Applies to Your STR?
The IRS — not Tennessee — determines how your net rental profit is taxed at the federal level. The key question is average guest stay length and your level of participation.
Schedule E — Passive Rental
Standard treatment for most STR hosts
- Net income reported on Schedule E of Form 1040 — no self-employment tax applies.
- Losses are generally passive and can only offset other passive income unless you qualify as a real estate professional (REPS).
- Depreciation, mortgage interest, repairs, and other ordinary expenses reduce taxable income.
- The Augusta Rule (IRC §280A(g)) may exempt up to 14 rental days per year from federal income tax if personal use exceeds 14 days.
No income ceiling
Schedule C — Active Business
Applies when average stay ≤ 7 days with significant services
- Net profit reported on Schedule C and subject to self-employment tax (~15.3%) on top of ordinary income tax.
- Material participation rules apply; losses may be deductible against ordinary income if you materially participate.
- Same expense deductions available as Schedule E, plus potential QBI deduction under IRC §199A.
- Consult a tax professional — misclassification between Schedule C and E is a common audit trigger.
No income ceiling
Depreciation
Depreciation for Tennessee STR Properties
The IRS allows you to deduct the cost of your rental property over its useful life — a significant non-cash deduction that lowers federal taxable income each year.
| Asset | Typical write-off period | Notes |
|---|---|---|
| Residential rental building | 27.5 years (straight-line) | Land is not depreciable; allocate purchase price between land and building. |
| Appliances & furniture | 5 years | May qualify for 100% bonus depreciation in year of purchase (check current IRS phase-down schedule). |
| Carpeting & flooring | 5 years | Classified as personal property if replaceable without structural damage. |
| Roof, HVAC, windows | 27.5 years (or 15 yrs via cost segregation) | Cost segregation study can reclassify components to shorter lives for accelerated deductions. |
Depreciation is a federal IRS concept; Tennessee has no individual state income tax, so there is no separate state depreciation schedule for individual hosts.
When you sell the property, the IRS recaptures depreciation previously claimed at a maximum 25% federal rate (unrecaptured Section 1250 gain). Plan ahead with a tax professional before selling.
Tennessee Lodging & Occupancy Taxes
State Sales Tax + Local Occupancy Taxes
Tennessee STR hosts face a stacked tax structure: a uniform state sales tax plus locally-set occupancy taxes that vary significantly by city and county.
The example below shows a typical combined rate for a Nashville-area STR. Rates in other Tennessee cities differ — Gatlinburg and Sevierville County totals can exceed 20%. Always verify the current rate with your specific county and city.
~15.5% (Nashville example; Gatlinburg-area totals can exceed 20%)
Tennessee Department of Revenue SUT-48; Avalara MyLodgeTax Tennessee Vacation Rental Tax Guide (2024); gowithsurge.com Tennessee STR Tax (2026)
| Booking type | Who collects & remits | What it means for your books |
|---|---|---|
| Airbnb or Vrbo booking (marketplace facilitator) | Platform collects and remits state sales tax and, in many jurisdictions, local occupancy tax on your behalf | You do not file a separate sales tax return for those bookings, but you must keep records showing the platform remitted on your behalf |
| Direct booking (your own website or phone) | You (the host) must collect, report, and remit state sales tax and applicable local occupancy taxes | Register with TN Department of Revenue for a sales tax account and with local authorities for occupancy tax; file returns on your assigned schedule |
| Business Tax (gross receipts ≥ $100,000 in a jurisdiction) | Host is always responsible — platforms do not remit business tax | Register with TN Department of Revenue and obtain a business license from the county/city clerk; file and pay business tax annually |
Local occupancy tax rates and collection responsibilities vary widely across Tennessee's 95 counties and hundreds of municipalities. Always confirm current rates and filing requirements with your specific county and city government before operating.
Platforms
How Airbnb, Vrbo & Others Handle Tennessee Taxes
As marketplace facilitators under Tennessee law, major platforms collect and remit state sales tax — but business tax and direct-booking obligations remain yours.
| Platform | Reports your income | Collects the local lodging tax | Annual earnings summary |
|---|---|---|---|
| Airbnb | Yes — Form 1099-K (if thresholds met) or 1099-MISC to IRS | Yes — state sales tax; local occupancy tax in many TN jurisdictions | Available in host dashboard by January 31 |
| Vrbo / HomeAway | Yes — Form 1099-K (if thresholds met) to IRS | Yes — state sales tax; local occupancy tax in many TN jurisdictions | Available in owner dashboard by January 31 |
| Direct / own website | No — you self-report all income on federal return | No — host must collect and remit all applicable taxes | You maintain your own records; no third-party form issued |
Hosting on Multiple Platforms?
Add up gross receipts from all platforms plus any direct bookings to determine whether you cross the $100,000 business-tax threshold in a jurisdiction. Each platform reports only its own payments — you must aggregate totals yourself for business-tax and income-tax purposes.
DAC7 / OECD Reporting (EU Rule)
DAC7 is a European Union directive and does not apply to Tennessee or US-based STR hosts. US platforms report to the IRS under domestic 1099 rules instead.
Tennessee Department of Revenue SUT-48 (revenue.support.tn.gov); Airbnb Help Center – US tax documents (airbnb.com/help/article/414)
Illustrative P&L: Schedule E vs. Schedule C
Example only — a Tennessee STR generating $40,000 gross annual revenue. Figures are illustrative; your situation will differ.
Record-Keeping
Stay Audit-Ready: What to Keep and How Long
Good records protect you if the IRS or Tennessee Department of Revenue questions your returns — and help you claim every deduction you're entitled to.
| Keep | How long | Why |
|---|---|---|
| Platform payout statements & 1099-K / 1099-MISC forms | At least 7 years | Proves gross income reported matches platform records; IRS statute of limitations is generally 3 years, extended to 6 for substantial underreporting |
| Receipts for all deductible expenses (repairs, cleaning, supplies, insurance, utilities) | At least 7 years | Required to substantiate deductions if audited by IRS or TN Department of Revenue |
| Records showing platform collected & remitted sales tax on your behalf | At least 7 years | TN SUT-48 explicitly requires hosts to maintain these records even when a marketplace facilitator remits on their behalf |
| Business license, registration certificates, and local occupancy tax filings | Permanently while operating; 7 years after cessation | Demonstrates compliance with TN business-tax and local licensing requirements |
| Property purchase documents, closing statements, and depreciation schedules | Permanently + 7 years after sale | Needed to calculate adjusted basis, depreciation recapture, and capital gain on eventual sale |
Tennessee has no individual state income tax, but the TN Department of Revenue can audit sales tax and business tax filings. Keep records for both federal and state purposes.
Estimator
Short-Term Rental Tax Estimator
Plug in your bookings and costs to see your likely taxable position.
Your Numbers
Total short-term-rental income, before costs.
Allowable running costs, mortgage interest, depreciation and platform fees.
Your top income-tax band, as a percentage.
Estimated tax owed
Income tax on your net rental profit at your marginal rate.
Illustrative estimate. A simplified model to orient you — it is not tax advice. Confirm your situation with a qualified local professional.
Sources & notes
This page is for educational purposes only and does not constitute tax, legal, or financial advice. Tax rules change frequently — verify all rates, thresholds, and deadlines with the Tennessee Department of Revenue and a qualified tax professional before filing.
- Tennessee Department of Revenue — SUT-48 Short-Term Rentals Reporting Requirements — Official guidance on sales tax, use tax, business tax, and franchise/excise tax obligations for STR hosts in Tennessee. revenue.support.tn.gov (2024)
- Avalara MyLodgeTax — Tennessee Vacation Rental Tax Guide — Overview of state and local lodging tax rates and collection requirements for Tennessee STRs. avalara.com/mylodgetax (2024)
- GoWithSurge — Tennessee Short-Term Rental Taxes (2026) — Summary of Tennessee STR tax types, rates, and filing requirements including local occupancy tax ranges. gowithsurge.com (2026)
- Airbnb Help Center — US Tax Documents — Explains 1099-K, 1099-MISC, and 1099-NEC thresholds and issuance timelines for US hosts. airbnb.com/help/article/414 (2025)
- Cherry Bekaert — Short-Term Rental Tax Rules Explained — CPA-firm analysis of IRS passive activity rules, Schedule E vs. C classification, Augusta Rule, and depreciation for STRs. cbh.com (2025)
- IRS — IRC §280A (Augusta Rule) — Statutory basis for the 14-day personal-use exclusion from federal rental income. law.cornell.edu/uscode/text/26/280A
Questions
Frequently Asked Questions — Tennessee STR Taxes
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