Tennessee’s Difficulty in Regulating Vacation Rentals

Tennessee’s Difficulty in Regulating Vacation RentalsAs Airbnb and similar home rental websites continue to thrive, Tennessee is struggling to regulate the laws for vacation rentals. As renting out your home for business use is not yet controlled legally, the grey area has caused some confusion as of recently, increasing the need for Vacation Rental Insurance.

Questioning whether or not these homeowners need a permit of some sort, which taxes to pay, and if the proper regulations for safety are followed have all been key components in the regulation struggle.

For example, a couple who rented out their Soddy Daisy home was charged with violating zoning laws for the neighborhood as their business was considered illegal in that residential location. While they were initially fined $22,000, an appeals court overturned the decision claiming that the regulations were unconstitutionally vague, according to the Washington Times.

Nashville’s Metro Council is now pushing local legislation to require short-term renters to carry insurance and a permit that ensures the homeowners are in compliance with the local parking and occupancy laws. Further, the new code would permit all residential neighborhoods to allow homeowners to host vacation rentals. However, these homes will not be required to supply sprinklers, which is not graciously accepted by the local fire marshal. As there have been accidental deaths for lack of these sprinklers, there is continued debate on the condition.

The last major concern among vacation home rentals is the issue of taxes. By law, if a homeowner is using their home for any commercial use, including temporary vacation rentals, they are required to pay a hotel occupancy tax. Tom Eddlemon, Metro Treasurer, has already sent out 430 notices to Davidson county homeowners who were in violation of this law. The penalty included a 6 percent tax on nightly revenue in addition to a $2.50 fee for each night. These fees added up quickly as they were required to pay penalties for each night since they started renting. In total, 125 homeowners have paid out an estimated $51,000.

At Barnes Insurance Agency, we specialize in providing overnight rental insurance to safeguard your home from the scope of risks associated with tenants. For more information on our products and services, contact us today at (866) 733-5424.

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