Overview: STR Status in Johnson City, TN

Short-term rentals ARE ALLOWED in Johnson City, Tennessee. Johnson City does not prohibit short-term rentals but has chosen to regulate them primarily through taxation rather than land use restrictions. The city's approach focuses on ensuring STR operators comply with applicable taxes, including a specific 7% City Hotel/Motel Transient Occupancy Privilege Tax that was explicitly extended to cover short-term rentals like Airbnb, VRBO, and similar platforms in 2019.

How to Start a Short-Term Rental Business in Johnson City

Starting an STR business in Johnson City requires a systematic approach focused on compliance with tax obligations and standard business requirements:

1. Initial Planning and Due Diligence

• Property Compliance: Verify your property is zoned for residential use and complies with all local zoning requirements
• HOA/Covenants Review: Check homeowners association bylaws and property deed restrictions, as these private agreements can prohibit STR operations even if the city allows it
• Insurance Assessment: Obtain adequate liability insurance coverage (Tennessee state law requires minimum $500,000 unless provided by marketplace platforms)

2. Business Registration and Licensing

• City Business License: Apply for a Johnson City business license through the Finance Department
• County Business License: Obtain a business license from the appropriate county (Washington, Sullivan, or Carter County, depending on property location)
• Federal Registration: Secure Federal EIN (Employer Identification Number) from the IRS

3. Tax Registration and Setup

• State Tax Registration: Register with the Tennessee Department of Revenue for sales tax collection
• Local Tax Understanding: Familiarize yourself with all applicable tax rates and collection requirements
• Platform Registration: Ensure your chosen platforms (Airbnb, VRBO, etc.) have correct tax remittance procedures

4. Property Preparation

• Safety Equipment: Install smoke alarms, carbon monoxide detectors, and fire extinguishers as required by state law
• Guest Information: Prepare guest welcome materials with important local information and emergency contacts
• Operations Setup: Establish cleaning protocols, key management systems, and guest communication procedures

Required Documents, Permits, Licenses, and Guidelines

Essential Documents and Licenses

• Personal Identification: Valid government-issued photo ID
• Business Identification: Federal EIN and Social Security Number or ITIN
• Property Documentation: Proof of ownership or lease agreement
• City Business License: Johnson City business license application and approval
• County Business License: Business license from appropriate county
• Insurance Documentation: Proof of liability insurance meeting state minimums
• Tax Registration: Tennessee Department of Revenue registration for sales tax collection

Required Safety Equipment (State Mandated)

• Smoke Alarms: Functional smoke alarms in all sleeping areas and on each level
• Carbon Monoxide Detectors: Required if property has fuel-burning appliances or attached garages
• Fire Extinguishers: Accessible ABC-type fire extinguishers
• Safety Compliance: Regular maintenance and testing of all safety equipment

Documentation for Tax Compliance

• City Tax Registration: Registration for Johnson City 7% occupancy tax
• Sales Tax Setup: Tennessee state and local sales tax registration
• Record Keeping System: Implement system to maintain three years of rental records as required by city ordinance

Specific Regulations for Short-Term Rentals

Johnson City Regulations

Tax Obligations

The primary regulatory focus in Johnson City is taxation:

City Hotel/Motel Transient Occupancy Privilege Tax (7%)

• Applies to all short-term rentals within city limits
• Defined as rentals lasting fewer than 90 continuous days
• Must be collected from guests and remitted monthly to city treasurer
• Due by 20th day of each month for the preceding month
• Late payments incur 12% annual interest plus 1% monthly penalty

Sales Tax Requirements

• State Sales Tax: 7% Tennessee state sales tax
• Local Sales Tax: 2.5% Johnson City local option sales tax
• County Sales Tax: Varies by county location (2.25% Sullivan, 2.75% Washington/Carter)

Total Tax Rates by County Location

• Washington County: 7% City Occupancy + 7% State Sales + 2.75% County = 16.75% total
• Sullivan County: 7% City Occupancy + 7% State Sales + 2.25% County = 16.25% total
• Carter County: 7% City Occupancy + 7% State Sales + 2.75% County = 16.75% total

County-Level Regulations

• Business Licenses: Required from the specific county where property is located
• Sales Tax Collection: County sales tax rates as noted above
• Standard County Business Regulations: Apply to all business activities

State-Level Tennessee Regulations

Tennessee Short-Term Rental Unit Act (SB1086)

• Definition: STRs are residential dwellings rented for fewer than 30 consecutive days
• Liability Insurance: Minimum $500,000 coverage required unless provided by marketplace
• Safety Equipment: Mandates smoke alarms, carbon monoxide detectors, and fire extinguishers
• Inspection Rights: State and local authorities may inspect properties for compliance

Business Tax Requirements

• Registration Required: Businesses meeting state revenue thresholds must register
• Platform vs. Direct Booking: Property management companies typically handle business tax for managed properties; individual owners handle their own
• Threshold: Check current Tennessee Department of Revenue thresholds (commonly around $10,000-$100,000 annually)

Marketplace Facilitator Requirements

• Platform Obligations: Airbnb, VRBO, and similar platforms must collect and remit certain taxes
• Host Responsibility: Operators remain responsible for any taxes not collected by platforms
• Verification Required: Hosts should verify which taxes their platforms handle

Zoning and Land Use

• No STR-Specific Zoning: Johnson City has not enacted specific zoning regulations for short-term rentals
• General Zoning Compliance: Properties must comply with existing residential zoning requirements
• Permitted Uses: STRs are generally considered residential uses and permitted in residential zones

Contact Information for Local Authorities

Johnson City Finance Department (Tax Specialist)

• Phone: 423-232-1480
• Primary Contact: Tax Specialist for occupancy tax questions
• Department: Finance Department
• Address: 601 E. Main Street, Johnson City, TN 37601
• Phone: 423-434-6000 (main number)
• Website: johnsoncitytn.org/services/finance/occupancy_taxes/index.php

Business License and General Inquiries

• Johnson City Business Licenses: Contact Finance Department at 423-434-6000
• Planning and Development: For zoning and general development questions
• Website: johnsoncitytn.org

County Contacts

• Washington County: Contact county clerk's office for county business license
• Sullivan County: Contact county clerk's office for county business license
• Carter County: Contact county clerk's office for county business license

State-Level Contacts

• Tennessee Department of Revenue: tn.gov/revenue
• Business Tax Information: Available through state revenue department

Source Pages and References

Primary Official Sources

1. Johnson City Occupancy Tax Information: www.johnsoncitytn.org/services/finance/occupancy_taxes/index.php
2. Hotel/Motel Tax Ordinance 4715-19: www.johnsoncitytn.org/Documents/Departments/Finance/Short%20Term%20Rental%20Taxes/Hotel%20Motel%20Tax%20Ordinance/hotel-motel%20tax%20Ordinance%204715-19.pdf
3. Johnson City Municipal Code: library.municode.com/tn/johnson_city/codes/zoning

Secondary Sources for Context

4. Tri-Cities STR Guide: tri-citiestnhome.com/short-term-rental-tri-cities-tn/
5. Tennessee STR Laws Overview: www.gosummer.com/post/tennessee-short-term-rental-laws
6. Tennessee STR Regulations Database: www.strprofitmap.com/regulations/TN

Important Verification Resources

• Tennessee Sales Tax Jurisdictional Database: tnmap.tn.gov/sst/sst.html
• Tennessee Department of Revenue: www.tn.gov/revenue.html
• Johnson City Corporate Limits Map: jctngis.maps.arcgis.com/apps/instant/portfolio/index.html?appid=e94afd592b5a487592ab8b2f529e5f61

Additional Considerations and Best Practices

Operational Compliance

• Monthly Tax Remittance: Ensure timely payment of all taxes by the 20th of each month
• Record Maintenance: Keep detailed records for minimum three years as required by city ordinance
• Platform Verification: Regularly verify that platforms are correctly collecting and remitting applicable taxes

Professional Recommendations

• Tax Professional Consultation: Consider consulting with a CPA familiar with Tennessee STR taxation
• Legal Review: Have an attorney review HOA agreements and property covenants before purchasing
• Insurance Review: Work with an insurance agent to ensure adequate coverage beyond state minimums

Future Monitoring

• Regulatory Changes: The STR regulatory environment is evolving; monitor for new regulations
• Tax Rate Updates: Tax rates can change; verify current rates before establishing operations
• Platform Policy Changes: Stay informed about changes in marketplace tax collection policies

This guide provides a comprehensive foundation for operating a compliant short-term rental business in Johnson City, Tennessee. Always verify current requirements with official sources before making business decisions.