Tennessee Vacation Rental Tax

Tennessee code annotated title 67 chapter 4 part 7 is amended by adding the following language as a new section.

Tennessee vacation rental tax.

Tennessee does not impose an income tax except for a so called hall income tax on interest and dividends. Some vacation rental markeplaces collect tennessee short term rental taxes for you when the listing is booked but not all do. The attorney general said the types of services offered through airbnb and vrbo fit that description. A property management company shall owe business tax based on its gross proceeds from overnight rentals and gross proceeds from any other source subject to the business tax levied by this part.

Essentially the tennessee llc is subject to a franchise and excise tax for the privilege of doing business in their state. Providing short term rentals of vacation lodging are required to register in the jurisdiction s in which the vacation lodging rental properties are located. Under tennessee law sales tax is assessed on any sale rental or charges for any accommodations furnished to a person for less than 90 continuous days. The short term rental less than 90 consecutive days for sales tax purposes of vacation lodging including a person s home is subject to sales tax.

Rent the property for no more than 14 days during the year and use the vacation house yourself 14 days or more during the year or at least 10 of the total days you rent it to others. Under this rule you don t pay tax on income you earn from the short term rental as long as you. You only need to file a return for the tennessee hall tax on interest and dividends at a rate of 5 if you are a person whose legal domicile is in tennessee and whose taxable interest and dividend income exceeded 1 250 2 500 if married filing jointly during the tax year. The property owner or property management company if one is used must collect and remit sales tax on the sales price of the rental.

The tax is based on the entity s net worth or the book value of all real estate and taxed at the rate of 25 cents per 100 and annual minimum tax of 100.