VaultSTRThe rules at a glance
Business license required
Yes — all STR operators must obtain a City of Gatlinburg business license before listing.
Owner-occupancy requirement
None. Investment properties and non-owner-occupied rentals are fully permitted.
LLC / entity ownership
Permitted. Corporate and LLC-owned STRs operate legally.
Zoning restrictions
Minimal. STRs are broadly allowed throughout Gatlinburg; verify specific parcel zoning with the city for any fringe or residential-only parcels.
City occupancy tax
3% local occupancy tax collected by the City of Gatlinburg, in addition to state and county taxes.
State and county tax
7% TN state sales tax + 2.25% Sevier County local sales tax. Total combined tax burden is approximately 12–13% of gross nightly revenue.
Tax remittance
Platforms (Airbnb, VRBO) collect and remit state and local sales taxes in Tennessee. Confirm whether the city occupancy tax is also platform-collected before advising clients.
Business license and registration
Every short-term rental operator in Gatlinburg must hold a current City of Gatlinburg business license. Licenses are renewed annually and tied to the property address. LLCs, corporations, and individual owners are all eligible. The license fee is nominal — the compliance burden is in staying current and properly remitting local occupancy taxes.
Taxes
Gatlinburg STR hosts owe three layers of tax: Tennessee state sales tax (7%), Sevier County local sales tax (2.25%), and the City of Gatlinburg occupancy tax (3%). That stacks to roughly 12–13% of gross nightly revenue. Airbnb and VRBO collect and remit the state and county portions in Tennessee, but confirm whether the city occupancy tax is covered by the platform or requires separate host remittance. Model conservatively at 13% until you verify.
What this means for your client's underwrite
Gatlinburg is a seasonality and pricing market, not a regulatory market. The permit exists, the taxes are meaningful but predictable, and the regulatory moat is thin — meaning competition is also unconstrained. Three checks before the pro forma:
- Verify parcel zoning with the City of Gatlinburg for any property outside the core tourist corridor.
- Confirm which taxes the booking platform collects versus what the host must remit directly.
- Build seasonality into the annual revenue model — Smoky Mountain occupancy swings significantly by season.
The VaultSTR Pro Forma models the full Gatlinburg tax stack and applies seasonal occupancy curves to every deal analysis.
Sources
- City of Gatlinburg: Business license and STR information
- Tennessee Department of Revenue: Sales and Use Tax
This is general information, not legal advice. Verify current rules with the City of Gatlinburg before advising a client.
Gatlinburg STR questions
Can an investor buy a cabin in Gatlinburg and run it as a full-time Airbnb?
Yes. Gatlinburg does not require owner-occupancy and imposes no residential zoning ban on investment STRs. Obtain a city business license and comply with tax requirements.
Can an LLC own and operate a Gatlinburg STR?
Yes. Entity ownership is permitted. Many Gatlinburg cabin operators hold properties in LLCs for liability and financing purposes.
Does Airbnb collect all Gatlinburg taxes?
Airbnb and VRBO collect and remit Tennessee state and Sevier County local sales taxes. The city occupancy tax remittance responsibility should be confirmed directly with the City of Gatlinburg and your booking platform.
What is the total tax rate on Gatlinburg STR revenue?
Approximately 12–13% of gross nightly revenue: 7% state sales tax + 2.25% Sevier County local sales tax + 3% city occupancy tax. Verify current rates before finalizing deal analyses.
Underwrite a Gatlinburg deal the right way.
The VaultSTR Pro Forma models the full Gatlinburg tax stack and builds seasonal occupancy curves into every deal analysis — before your client writes the offer.
Free to use. No credit card required.