Overview: Are Short-Term Rentals Allowed in Madison, TN?

Short-term rentals are allowed in Madison, TN, but with important restrictions that investors must understand. Madison is located within Nashville and Davidson County, making it subject to Metropolitan Nashville regulations. The governing body requires permits for all short-term rentals operating on platforms like Airbnb, Vrbo, and HomeAway. New non-owner occupied short-term rental permits are only available in specific non-residentially zoned areas within Madison, while owner-occupied permits may be more accessible depending on the zoning classification of your property.

How to Start a Short-Term Rental Business in Madison, TN

Step 1: Determine Your Property's Zoning Classification

Before investing, verify whether your Madison property falls within an eligible zoning district for short-term rentals. New non-owner occupied permits are restricted to commercial and mixed-use zoning districts, while residential districts have limitations.

Step 2: Obtain Required Permits and Licenses

• Metropolitan Nashville Short-Term Rental Property (STRP) Permit: Required for all short-term rentals
• Business License: Both Davidson County and Nashville city business licenses
• Sales Tax Registration: State and local sales tax registration
• Hotel Occupancy Tax Registration: Required for collecting/remitting occupancy taxes

Step 3: Prepare Required Documentation

• Property insurance with minimum $1 million liability coverage
• Certified floor plan of the dwelling
• Proof of tax payment compliance
• Notarized affidavit confirming information accuracy
• HOA statement (regardless of whether HOA exists)

Step 4: Submit Application and Pay Fees

• Permit Fee: $313 for new applications
• Processing Time: Allow time for application review and potential inspections
• Fire Marshal Inspection: Required for multifamily structures

Step 5: Comply with Operational Requirements

• Post local responsible party contact information
• Ensure maximum occupancy limits are maintained
• Collect and remit all applicable taxes
• Maintain safety equipment and compliance with building codes

Required Documents, Permits, Licenses, and Guidelines

Federal and State Requirements

• Federal EIN (Employer Identification Number): Required for tax reporting
• State Sales Tax Registration: Tennessee Department of Revenue registration
• State Business Registration: Tennessee Secretary of State filing if operating as LLC or corporation

Local Government Requirements

• Davidson County Business License: Minimum $10,000 gross receipts threshold
• Nashville City Business License: $15 registration fee per property
• STRP Permit: Metropolitan Nashville Codes Department permit
• Hotel Occupancy Tax Registration: For collecting/remitting occupancy taxes

Property-Specific Documentation

• Proof of Ownership: Deed or property tax records
• Liability Insurance: Minimum $1 million per occurrence coverage
• Certified Floor Plan: Including all rooms, doors, windows, and smoke detector locations
• HOA Statement: Whether property is subject to HOA regulations or not
• Two Forms of Identification: Proof of residence for owner-occupied applications
• Fire Marshal Inspection Report: Required for multifamily structures

Safety and Compliance Requirements

• Smoke Alarms: Required in all sleeping areas and common areas
• Carbon Monoxide Detectors: Required on habitable floors
• Fire Extinguisher: Five-pound minimum rating
• Maximum Occupancy Compliance: Cannot exceed twice the number of permitted sleeping rooms plus four (maximum 12)

Specific Regulations for Short-Term Rentals

Metropolitan Nashville and Davidson County Regulations

Permit Types and Restrictions

Owner-Occupied STRP Permits:

• Property must be owner's primary residence
• Owner must be natural person(s), not legal entities
• Allowed in most residential zoning districts
• Single party rental only
• One permit per lot in single-family and two-family zones

Non-Owner Occupied STRP Permits:

• New permits restricted to non-residentially zoned areas including:
  • MUN, MUN-A (Mixed-Use Neighborhood)
  • MUL, MUL-A (Mixed-Use Low)
  • MUG, MUG-A (Mixed-Use General)
  • MUI, MUI-A (Mixed-Use Intensive)
  • OG (Office General)
  • OR20 through OR40-A (Office Residential)
  • ORI, ORI-A (Office Residential Intensive)
  • CN, CN-A (Commercial Neighborhood)
  • CL, CL-A (Commercial Limited)
  • CS, CS-A (Commercial Service)
  • CA (Commercial Airport)
  • CF (Commercial Fringe)
  • DTC (Downtown Commercial - North, South, West, Central)
  • SCN, SCC, SCR (Specific Commercial)

Operational Requirements

• Maximum Occupancy: Twice the number of sleeping rooms plus four (maximum 12 persons)
• Minimum Rental Period: No rentals for less than 24 hours
• Single Party Restriction: Cannot rent to multiple parties simultaneously
• Age Requirement: Principal renter must be 21+ years old
• Food Service Ban: No food preparation or service to guests
• Vehicle Restrictions: No recreational vehicles, buses, or trailers visible on property
• Signage Compliance: Must follow Metropolitan Code Title 17, Chapter 32
• Local Contact Requirement: Name and phone number of responsible party posted in unit
• 24/7 Availability: Responsible party must be available to respond to issues

Safety and Building Requirements

• Compliance with state and local fire safety codes
• Smoke alarm installation and maintenance
• Carbon monoxide detector requirements
• Building code compliance for residential conversions
• Fire Marshal inspections for multifamily properties

Tax and Financial Obligations

• Hotel Occupancy Tax: 7% plus $2.50 nightly fee
• Sales Tax: 9.25% combined state and local rate
• Business Tax: County and city business taxes based on gross receipts
• Property Tax: Standard property tax obligations
• Franchise and Excise Tax: For LLC and corporate entities

Enforcement and Penalties

• Permit Revocation: Three violations can result in permit cancellation
• Violation Penalties: Daily fines for operating without permits
• Transfer Restrictions: Permits cannot be transferred to new owners
• Ownership Change Impact: Changing ownership from individual to entity cancels permit

Tennessee State-Level Regulations

Statewide Requirements

• Liability Insurance: Minimum $500,000 coverage required
• Safety Equipment: Fire sprinklers, smoke alarms, and carbon monoxide alarms mandatory
• Business License: County and city business licenses required for all jurisdictions with operations
• Tax Registration: State sales tax and local business tax registration

State Protection of STR Rights

• Prohibition Protection: Tennessee law prevents local governments from banning short-term rentals
• Classification Restrictions: Cannot regulate based on classification, use, or occupancy type
• Health and Safety Exception: Local regulations allowed only for health and safety protection using least restrictive means

Contact Information

Metropolitan Nashville Codes Department

• Phone: (615) 862-6500
• Email: [email protected]
• Website: www.nashville.gov/departments/codes/short-term-rentals
• Address: 800 2nd Avenue South, Nashville, TN 37210
• Hours: Monday-Friday, 8:00 AM - 4:00 PM

Business License and Tax Office

• Phone: (615) 862-6310
• Website: www.nashville.gov/departments/finance/business-licenses
• Address: 700 2nd Avenue South, Nashville, TN 37210

Tennessee Department of Revenue

• Phone: (615) 253-0600
• Website: www.tn.gov/revenue.html
• Address: Andrew Jackson Building, 500 Deaderick Street, Nashville, TN 37242

Davidson County Clerk

• Phone: (615) 862-6710
• Website: countyclerk.nashville.gov/
• Address: 555 Lebanon Pike, Nashville, TN 37210

Short-Term Rental Appeals Board

• Filing Information: Contact Codes Department for appeal procedures
• Meeting Schedule: Check Nashville.gov for current appeal dates and deadlines

Links to Source Pages

• Metropolitan Nashville Short-Term Rental Information: www.nashville.gov/departments/codes/short-term-rentals
• STR Permit Application: www.nashville.gov/departments/codes/short-term-rentals/apply-short-term-rental-property-permit
• Operation Requirements: www.nashville.gov/departments/codes/short-term-rentals/operation-requirements
• Permit Types and Zoning Districts: www.nashville.gov/departments/codes/short-term-rentals/permit-types
• Zoning District Information: library.municode.com/tn/metro_government_of_nashville_and_davidson_county/codes/code_of_ordinances?nodeId=CD_TIT17ZO_CH17.08ZODILAUS_17.08.030DILAUSTA
• Tax Remittance Information: www.nashville.gov/departments/finance/division-accounts/collections/pay-short-term-rental-property-occupancy-tax
• Report Violations: hub.nashville.gov/s/request-type/a0ut0000000IlHOAA0/short-term-rental-complaint
• Tennessee State STR Laws: www.tn.gov/revenue/taxes/business-tax/registration-and-licensing.html
• Statewide STR Regulations: www.capitol.tn.gov/Bills/110/Bill/SB1086.pdf

Important Investment Consideration: Given Madison's location within Nashville's Metropolitan area, the most restrictive regulations for non-owner occupied properties in residential zones significantly limit investment opportunities. Investors should focus on properties zoned for commercial or mixed-use purposes within Madison to qualify for new non-owner occupied permits. Properties with existing permits in restricted residential zones may be eligible for renewal but cannot be transferred to new owners.