Executive overview

• Are STRs allowed? Yes. Short‑term rentals are legal in Tennessee, including Covington, subject to state‑level rules and any local (city/county) business license, tax, and safety requirements. As of the available sources, Covington’s municipal code does not contain explicit short‑term rental‑specific ordinances (e.g., zoning caps or local permits), so investors should rely on Tennessee’s state law framework and obtain required state, county, and city business licenses/tax registrations. [Source: Lodge Compliance]

What you must do first (one‑page action plan)

• Confirm zoning: Call the Planning and Building Department and verify your property’s zoning permits short‑term rentals (see contacts below).
• Get a sales tax permit: Register with the Tennessee Department of Revenue for sales and use tax (state). This is required to collect/remit state sales tax and the state hotel occupancy tax. Process typically takes about 10 business days. [Source: Lodge Compliance]
• Obtain business licenses:
  • Tipton County business license (≈$15 fee; check current fee with the County Clerk/Register).
  • City of Covington business license (≈$15 fee; confirm with the City Recorder’s Office). [Source: Lodge Compliance]
• Comply with state safety requirements:
  • Install smoke alarms in every sleeping room.
  • Install carbon monoxide alarms within 10 feet of each sleeping room if the property has a fossil‑fuel‑burning heater, appliance, or fireplace.
  • Comply with maintenance responsibilities; penalties for non‑compliance are a Class C misdemeanor. [Source: Tennessee Code § 68‑120‑112]
• Taxes:
  • State sales tax applies to STRs (see tax section below).
  • State hotel occupancy tax applies: 1% for whole‑house residential rentals; 6% for room rentals. [Source: Lodge Compliance]
  • Local sales/occupancy taxes may apply; verify with County Clerk and City Recorder.

Start‑up checklist (step‑by‑step)

1. Pre‑site diligence

• Zoning check: Call the Planning and Building Department to confirm STRs are permitted on the subject parcel. If not, explore adjacent parcels or consider different asset types.
• Insurance: Secure short‑term rental liability coverage and ensure your policy aligns with Tennessee requirements.
• Utilities and services: Confirm reliable water, gas, electric, wastewater, and trash service compatibility with frequent turnover stays.

2. Licensing and tax registration

• State sales tax permit:
  • Register with the Tennessee Department of Revenue.
  • Expect processing in about 10 business days.
  • You will collect sales tax on the total rental price (including cleaning/pet fees). [Source: Lodge Compliance]
• Business licenses:
  • Tipton County business license (fee typically ≈$15; confirm with County Clerk/Register).
  • City of Covington business license (fee typically ≈$15; confirm with City Recorder’s Office). [Source: Lodge Compliance]
• Local occupancy taxes:
  • Verify with the County Clerk/Register and City Recorder whether any local occupancy or hospitality taxes apply and how to remit. If applicable, obtain any required registration.

3. Safety compliance

• Install smoke alarms in every sleeping room.
• If the property has any fossil‑fuel‑burning heater, appliance, or fireplace, install CO alarms within 10 feet of each sleeping room.
• Provide and maintain clear operating instructions for guests and keep maintenance logs. Non‑compliance can result in penalties. [Source: Tennessee Code § 68‑120‑112]

4. Operations setup

• Guest screening: Standardize screening procedures consistent with platform policies and fair housing requirements.
• Leasing documents: Prepare house rules, check‑in/check‑out procedures, and emergency contact information.
• Tax remittance cadence: Set calendar reminders for monthly or quarterly filings (frequency determined by the Department of Revenue and local authorities).
• Recordkeeping: Maintain guest ledgers, reservation records, invoices, and tax remittance evidence for audit readiness.

Required documents, permits, licenses, and guidelines

• State registration
  • Tennessee sales and use tax registration (required to collect/remit state sales tax). [Source: Lodge Compliance]
• City and county business licenses
  • Tipton County business license (≈$15; confirm with County Clerk/Register).
  • City of Covington business license (≈$15; confirm with City Recorder’s Office). [Source: Lodge Compliance]
• Safety requirements (state‑wide)
  • Smoke alarms: Every sleeping room.
  • Carbon monoxide alarms: Within 10 feet of each sleeping room if fossil‑fuel‑burning equipment is present.
  • Maintenance obligations for tenants/owners; penalties for violations (Class C misdemeanor). [Source: Tennessee Code § 68‑120‑112]
• Operational guidelines
  • Keep guest records sufficient for tax and compliance purposes.
  • Post emergency procedures and local contact information inside the unit.
  • Comply with all state and local fire and building code standards.

Covington/Tipton County regulations specific to STRs

• City of Covington: No STR‑specific ordinances were identified in the Covington Municipal Code (April 2014; ordinances passed since may not appear). Hosts must meet state law and obtain city/county business licenses and tax registrations. [Source: Covington Municipal Code]
• Tipton County: No separate STR registration identified in the provided sources. However, county business license requirements typically apply; confirm with the County Clerk/Register. [Source: Lodge Compliance]
• If new ordinances are adopted after the code revision date, they will be in the city’s ordinance book or handled through the City Recorder. Check with the City Recorder’s Office for the most current ordinances.

Tennessee statewide STR framework (applicable to Covington)

• Definition: A short‑term rental unit is a residential dwelling rented wholly or partially for a fee for a period of less than 30 continuous days. This includes cabins, houses, condos, apartments, and timeshares; excludes hotels, motels, and bed‑and‑breakfast establishments. [Source: Lodge Compliance]
• State sales tax: 7% on short‑term rentals. [Source: Lodge Compliance]
• State hotel occupancy tax:
  • Whole‑house residential rentals: 1%.
  • Room rentals: 6%.
  • Combined totals: 8% (sales 7% + hotel 1%) for whole‑house; 13% (sales 7% + hotel 6%) for room rentals. [Source: Lodge Compliance]
• State safety requirements: Smoke alarms in every sleeping room; CO alarms within 10 feet of each sleeping room when fossil‑fuel‑burning equipment is present; maintenance responsibilities; penalties for non‑compliance are a Class C misdemeanor. [Source: Tennessee Code § 68‑120‑112]
• Registration and licensing
  • State: Register with the Tennessee Department of Revenue and obtain a sales tax certificate to collect/remit taxes (≈10 business days). [Source: Lodge Compliance]
  • Local: Secure county and city business licenses (fees ≈$15 each; confirm current fees). [Source: Lodge Compliance]
• Notes for nearby cities (context only)
  • Nashville, Knoxville, and Chattanooga have additional local permits, caps, and inspections. These do not apply in Covington unless Covington adopts similar rules. [Source: Lodge Compliance]

Local contacts and resources

• City of Covington – Planning and Building Department
  • Phone: (901) 476‑7153
  • Email: Not provided
  • Website: Not specified in sources; see City Hall listing below
  • Purpose: Zoning verification; building/fire code questions; business license issuance routing.
• City of Covington – City Hall (general)
  • Address: 350 W Washington Ave, Covington, TN 38019
  • Phone: (901) 476‑7153
  • Purpose: City business license and ordinance information; referral to appropriate departments.
• Tipton County – County Clerk/Register (business licensing)
  • Phone: Not provided in sources
  • Email: Not provided
  • Website: Not provided in sources
  • Purpose: County business license and local tax registration.
• Tennessee Department of Revenue (state tax registration and compliance)
  • Phone: Not provided in sources
  • Email: Not provided
  • Website: Not provided in sources
  • Purpose: Sales tax certificate and state hotel occupancy tax registration/remittance.

Links to source pages (accessible in the provided materials)

• Lodge Compliance – Short‑Term Rentals Laws in Tennessee, United States (state overview; registration, taxes, safety): www.lodgecompliance.com/states/tennessee
• Covington Municipal Code (April 2014; official city ordinances; absence of STR‑specific rules noted): www.mtas.tennessee.edu/system/files/codes/combined/Covington-code.pdf
• Tennessee Code § 68‑120‑112 (statewide safety requirements for lodging/STR units): codes.findlaw.com/tn/title-68-health-safety-and-environmental-protection/tn-code-sect-68-120-112.html

Final notes for investors

• Legality: STRs are legal in Tennessee and are not prohibited by Covington’s municipal code (as of the sources provided).
• Compliance path: State sales tax registration, county and city business licenses, and safety requirements are non‑negotiable. Local occupancy taxes may apply; verify with county and city.
• Monitoring: Because Covington’s code may be updated, periodically check with the City Recorder’s Office for any newly adopted STR ordinances.
• Due diligence: Confirm zoning and any HOA/POA rules before purchase; they can be more restrictive than city/state law.