Is a short-term rental legal in Gatlinburg, TN?
Short-term rentals ('tourist residencies') are legal and widespread in Gatlinburg but require a permit.
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Whole-home STR ('tourist residency') is allowed but conditional on zoning: permitted in R-1, R-2, R-3 and C-1 Tourist Commercial districts (Zoning Ord. §§ 701.5, 703.1, 705.1, 706.9) and prohibited in R-1A (§ 702.1) and R-2A (§ 704.1). Municipal Code § 5-701 defines a tourist residency as renting a residence 'on an overnight, weekly or other basis of less than thirty days duration' to tourists/visitors, so rentals of 30+ days fall outside the permit requirement (min_stay_exempt_days = 30). Note: some vendor guides cite '89 days'; that figure conflates the hotel/motel tax 'transient' definition (less than 90 continuing days, § 5-601(4)) with the permit definition. Hosted renting of rooms in one's principal dwelling is treated as a home occupation limited to five tourist rooms with one off-street space per room (Zoning Ord. § 409.2). No fixed max-guest number in code; occupancy is set by the building official under Life Safety 101/IBC, and a threshold of >12 occupants (or >3 stories / >5,000 sq ft) reclassifies the dwelling and removes the fire-sprinkler exemption (§ 5-701(1)-(2)).
What you need to operate
The full picture
Short-term rentals ('tourist residencies') are legal and widespread in Gatlinburg but require a permit. Any dwelling rented to tourists for less than 30 days must obtain an annual Tourist Residency Permit from the building official and pass an annual fire/life-safety inspection (Gatlinburg Municipal Code Title 5, Ch. 7, §§ 5-701 to 5-705). The base permit fee is $200 per residence (covers up to two bedrooms) plus $75 for each additional bedroom (§ 5-703). Zoning limits location: tourist residences are permitted in R-1, R-2, R-3 residential and C-1 Tourist Commercial districts but are expressly prohibited in the R-1A and R-2A residential districts (Zoning Ordinance §§ 701.5, 702.1, 704.1, 706.9). No primary-residence requirement and no city-wide cap on the number of permits. Guest lodging is taxed at roughly 12.75% (7% TN state sales tax + 2.75% Sevier County local option sales tax + 3% Gatlinburg hotel/motel tax), and operators also owe a 1.25% city gross-receipts privilege tax. Tennessee's Short-Term Rental Unit Act (T.C.A. §§ 13-7-601 to 13-7-606) grandfathers pre-existing STRs and bars the city from retroactively banning them. Penalty for operating without a permit is a fine up to $50 per rental (§ 5-705).
Taxes on guests & hosts
| Tax | Rate | Applies to | Platform collects | Official source |
|---|---|---|---|---|
| Tennessee state sales tax (on lodging) | 7% | Gross consideration for accommodations/short-term lodging | Yes | source |
| Sevier County local option sales tax | 2.75% | Gross consideration for accommodations/short-term lodging within Sevier County (incl. Gatlinburg) | Yes | source |
| Gatlinburg Hotel/Motel (occupancy) Tax | 3% | Privilege of transient occupancy (less than 90 continuing days) of any hotel/tourist residence in the city | Not verified | source |
| Gatlinburg city gross-receipts privilege tax | 1.25% | Gross receipts of every business in the city, including renting accommodations to transients (paid by the operator) | No | source |
Enforcement
What we could not verify (5)
- Exact standard business-license fee for STR operators (city and county, commonly $15 each under TN Business Tax Act) not confirmed against an official City of Gatlinburg source; § 5-401 adopts the state Business Tax Act but does not state a dollar fee.
- Whether Gatlinburg's city 3% hotel/motel tax and 1.25% gross-receipts privilege tax are collected/remitted by platforms (Airbnb/Vrbo) versus remitted directly by the operator to the city Department of Finance - state law only clearly covers state/local sales and local occupancy tax marketplace collection.
- City of Gatlinburg official permit page (gatlinburgtn.gov) is behind a JavaScript/Cloudflare challenge and could not be machine-fetched; permit fee ($200 + $75/bedroom), annual renewal, and inspection requirements were instead verified against the MTAS-hosted Gatlinburg Municipal Code, which is the authoritative codified source.
- Sevier County local option rate of 2.75% is derived from the official TACIR combined rate of 9.75% for Sevier minus the 7% state rate; not read off a per-jurisdiction line item.
- Application-specific requirements sometimes cited by vendors (proof of insurance, 24/7 local contact, posted occupancy/parking plan) appear on the city's online application but were not verifiable in the codified ordinance or a fetchable official page.
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Sources
- Gatlinburg Municipal Code (Title 5 Ch. 7 Tourist Residency Permits; Ch. 6 Hotel/Motel Tax; Ch. 2 Privilege Tax) - MTAS
- City of Gatlinburg Municipal Zoning Ordinance (updated through 2022)
- Apply For A Tourist Residency Permit - City of Gatlinburg (official page; behind JS challenge, not machine-fetchable this pass)
- Summary of the Short-Term Rental Unit Act - MTAS (T.C.A. 13-7-601 et seq.)
- Section 13-7-603 - Effect of ordinance regulating STR use (Justia — unofficial mirror of TN Code; statute substance also covered by the official MTAS summary above)
- Tennessee Department of Revenue - Sales and Use Tax (7% state rate)
- Tennessee Department of Revenue - Local Sales Tax (2.75% local option cap)
- TACIR - Combined State and Local Option Sales Tax Rates (Sevier County 9.75%)
- Tennessee Department of Revenue - Local Occupancy Tax (marketplace collection since 2021)
- Sevier County Trustee - Lodging Tax (county 3% does not apply in Gatlinburg)
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STRWatch publishes educational information about short-term rental regulation, checked against the official sources linked above as of the date shown. It is not legal advice, and rules change — a city can move between the times we check it. For decisions with money at stake, confirm with the authority linked above or a local attorney.