Mountain City, Tennessee

Mountain City regulates short-term rentals at the municipal level under authority granted by Tennessee’s Short-Term Rental Unit Act, which lets municipalities create their own permitting processes. The city has adopted a $100.00 annual permit-and-inspection fee for short-term rentals, and the City Recorder maintains a list of active rentals within city limits.

However, news reporting indicates the city has admitted it does not yet have a formal, functioning process to actually collect the fee or enforce the rules. Enforcement is currently minimal, and the town is in the middle of a broader ordinance-code revision covering both short-term rentals and campgrounds, done in partnership with the University of Tennessee’s Municipal Technical Advisory Service. A draft ordinance is posted on the city’s website. No owner-occupancy requirement and no statewide cap on nights per year were found, and Mountain City’s specific zoning districts where STRs are permitted or prohibited were not clearly defined in available public sources as of this writing.

On taxes, lodging stays are subject to a local occupancy tax of roughly 5.00%, on top of Tennessee’s state and local sales taxes, for a combined lodging tax burden reported near 13.5%. Hosts must also register with the Tennessee Department of Revenue for sales and occupancy tax, and obtain applicable state, county, and city business licenses.

Given the ordinance is actively being revised and enforcement is not yet functioning, investors should treat the local framework as in flux and confirm current requirements directly with Mountain City and Johnson County before operating.