Overview

Yes, short-term rentals are explicitly allowed in Gatlinburg, TN, provided property owners obtain the required Tourist Residency (TR) permit and comply with all local regulations. Gatlinburg has a well-defined regulatory framework that permits both owner-occupied and non-owner occupied short-term rentals, making it a viable market for STR investors.

How to Start a Short-Term Rental Business in Gatlinburg

Step 1: Verify Zoning Compliance

Before purchasing or listing a property, confirm it is located in an eligible zoning district. Short-term rentals are specifically prohibited in R1A (Low-Density Residential) and R2A (Medium Density Residential) zones. Contact the city planning department to verify your property's zoning designation.

Step 2: Obtain Required Business Licenses

• City Business License: Required from Gatlinburg city government
• County Business License: Required from Sevier County
• Both licenses are typically available for a $15 fee each

Step 3: Apply for Tourist Residency (TR) Permit

Complete the application process with the City of Gatlinburg:

• Submit the official Tourist Residency Permit application
• Pay the applicable permit fees
• Schedule and pass required inspections

Step 4: Obtain Liability Insurance

State law requires minimum $500,000 in liability coverage unless your listing platform provides equivalent coverage. Additionally, local requirements may mandate property damage insurance.

Step 5: Establish Local Responsible Agent

Designate a local contact person who can respond to guest needs and regulatory issues within 24 hours.

Step 6: Register for Tax Collection

Set up systems to collect and remit applicable lodging and sales taxes.

Required Documents, Permits, Licenses, and Guidelines

City of Gatlinburg Requirements

Tourist Residency Permit Application must include:

• Owner's name, address, and phone number
• Rental unit name and location
• Number of stories, bedrooms, and parking spaces
• Maximum number of occupants
• Square footage of the building
• Rental agent's name, address, and phone number
• Completed application form

Supporting Documentation:

• Proof of ownership
• Proof of residency (if applicable)
• Proof of insurance coverage
• Site plan showing unit layout
• Floor plans with room specifications

Permit Fees:

• $200 for units with 2 or fewer bedrooms
• $75 additional fee per bedroom over two

Business Licenses:

• City business license: $15
• County business license: $15

State of Tennessee Requirements

Statewide Regulations (SB1086):

• Minimum $500,000 liability insurance (unless marketplace provides)
• Fire sprinklers in qualifying properties
• Smoke and carbon monoxide alarms required
• Compliance with building and fire codes

Specific Regulations

City of Gatlinburg Regulations

Zoning Restrictions:

• Prohibited: R1A (Low-Density Residential) and R2A (Medium Density Residential) zones
• Permitted: Most other zoning districts where tourist residences are allowed

Safety Requirements:

• Annual fire and building inspection mandatory
• Working smoke detectors in all sleeping areas
• Carbon monoxide detectors on habitable floors
• 2A10BC fire extinguisher on each level
• Clear emergency escape routes
• Electrical system compliance
• Heating and cooling system maintenance
• Sprinkler systems required for properties exceeding any of these thresholds:
  • More than 3 stories
  • More than 5,000 gross square feet
  • More than 12 occupants

Occupancy Limits:

• Determined by property size and bedroom count
• Example guidelines: studio (2 guests), 3-bedroom (8 guests maximum)
• No more than one party per property at a time

Operating Requirements:

• Responsible agent contact information posted within unit
• No rentals for periods less than 24 hours
• Compliance with noise and waste management regulations
• Adequate parking provisions

Sevier County Regulations (Outside City Limits)

Annual Permit Program (effective January 1, 2024):

• Required: Annual permit for all STRs outside city limits
• Inspection: Annual safety inspection mandatory
• Fees:
  • $250 for properties sleeping 12 or fewer occupants
  • $250 + $25 per additional occupant for properties sleeping 13+

Inspection Areas:

• Fire safety equipment
• Smoke and carbon monoxide alarms
• Emergency escape routes
• Electrical safety
• Gas/charcoal grill safety
• Stair handrails and safety features

State of Tennessee Regulations

Tax Requirements:

• Sales Tax: 9.75% total (state and local combined)
• Lodging Tax: 3% in Sevier County
• Registration required for tax collection and remittance

Insurance Requirements:

• Minimum $500,000 liability coverage (unless marketplace provides equivalent)
• Property damage insurance may be required locally

Tax Implications

Property Tax Classification

Properties used as short-term rentals with a business license that are not the owner's principal residence are classified as commercial properties at 40% assessment rather than the standard 25% residential classification. This represents a significant increase in property tax liability.

Sales and Lodging Taxes

• Total Sales Tax: 9.75% (state and local combined)
• Sevier County Lodging Tax: 3%
• Collection Responsibility:
  • Property management companies typically handle collection
  • Individual owners must register and collect taxes directly
  • Internet platforms may collect and report sales tax, but owners remain responsible

Contact Information

City of Gatlinburg

Gatlinburg City Hall
Phone: (865) 436-1400
For permit applications and zoning verification

Website: Gatlinburg Tourist Residency Permit Application
Direct Application Link: TR Permit Application PDF

Sevier County (Outside City Limits)

Sevier County Fire Marshal's Office
Phone: (865) 774-3603
Email: firecodequestions@seviercountytn.org
Email (permits): firepermits@seviercountytn.gov

Mailing Address:
Sevier County Fire Marshal's Office
149 Industrial Park Drive
Sevierville, TN 37862

Online Application: Community Connect Portal
Inspection Scheduling: Calendy Link

State of Tennessee

Tennessee Department of Revenue
For tax registration and guidance on sales tax requirements

Links to Source Pages

1. Gatlinburg Short-Term Rental Laws Overview - Jason White Team
2. Gatlinburg Tourist Residency Permit Application - City of Gatlinburg
3. Gatlinburg STR Regulations Summary - GetChalet
4. Sevier County STRU Permit Program - Sevier County Government
5. Tennessee Short-Term Rental Laws Overview - Summer
6. Municipal Zoning Ordinance - City of Gatlinburg
7. Tennessee Short-Term Rental Unit Act (SB1086) - Tennessee General Assembly

Important Considerations for Investors

• Zoning Verification is Critical: Always confirm zoning before purchase, as STRs are specifically prohibited in R1A and R2A zones
• Annual Inspection Requirements: Budget for both city and county inspection requirements if property spans jurisdictions
• Insurance Costs: Factor in higher liability insurance requirements into operating budgets
• Property Tax Implications: The commercial classification (40% vs 25% residential) significantly impacts annual operating costs
• Market Demand: Gatlinburg's tourism-driven economy provides strong STR demand, but regulations are well-defined and enforced
• Local Management: Required responsible agent designation means investors should plan for local property management or designate themselves if local

This regulatory framework provides clear pathways for STR investment in Gatlinburg while maintaining safety and neighborhood integrity standards. Success requires careful attention to compliance requirements and budgeting for associated costs.