State Bill Passes

The Tennessee state legislature passed a bill with some crucial changes and notable impacts for STRs. (You can read the full bill HA0813 here.)

  • Sections 1-4 require all local governments to allow the hotel occupancy taxes in their jurisdictions to be collected and remitted by short-term rental marketplaces and prohibits them from requiring the individual STR operator from collecting and remitting these taxes.
  • Section 5 provides deed transfer protection. Basically, after the effective date of the STR Act in 2018, grandfather protection can’t be lost because a property was transferred between spouses, can’t be lost as a result of a marriage or divorce, and can’t be lost because the property was transferred into a revocable living trust.
  • Sections 6-10 require all short-term rental unit marketplaces to collect the hotel occupancy tax from people who book on their platform and remit those taxes to the State Department of Revenue. The sections also set up the way that the Department of Revenue then pays the local hotel occupancy taxes to local governments. The requirement for the platforms to collect and remit is effective January 1, 2021.
  • Section 11 (which is rewritten in amendment HA1028) puts important provisions into place for short-term rental unit operators with regards to property taxes.
    • The first piece of the property tax section classifies all owner-occupied property that contains no more than 1 rental unit on the property as residential. 
    • The second piece allows Tennessee residents to designate one additional parcel of property in Tennessee that can be classified as residential as long as it meets all the following requirements:
      1. The property doesn’t contain more than one rental unit
      2. The property is used as a STR
      3. The owner of the property lives on the secondary property for at least 14 days in a calendar year or for at least 10% of the number of days that the property is rented, whichever is greater
      4. The owner files an affidavit with the property assessor by September 1 of the prior year that verifies all this information and they are only claiming one residence pursuant to this law
  • Section 12 is the effective date section. The Transfer clause goes into effect as soon as the Governor signs the bill; all other sections take effect January 1, 2021.

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