This guide covers short-term rental rules for the City of Memphis, Tennessee. Neighboring markets often confused with Memphis include:
- Germantown: Separate city with its own STR regulations and enforcement.
- Bartlett: Distinct municipality north of Memphis, not governed by Memphis ordinances.
- Collierville: Southeastern suburb with independent local rules for rentals.
- Lakeland: Separate jurisdiction northeast of Memphis, with its own STR policies.
Legality Verdict
Short-term rentals are legal in Memphis with a required city permit, but enforcement is tightening and AI-based monitoring is in use. The total tax burden is high, and compliance costs are above average.
- Legality Status: 4/5
- License Availability: 4/5
- Compliance Cost (% revenue): 3/5
- Regulatory Stability: 2/5
- Enforcement Climate: 2/5
TL;DR
Memphis defines STRs as residential units with up to four sleeping rooms rented for transient stays. A city permit is mandatory ($300 initial, $150 annual renewal), and the total tax burden is 13.25% of gross receipts. No city-wide cap or primary-residence rule exists, but AI-based enforcement is ramping up. The biggest gotcha: 90% of STRs currently lack permits, and enforcement is expected to intensify.
Quick Facts
| Item | Detail |
|---|---|
| STR Definition | Residential unit or detached ADU with ≤4 sleeping rooms rented for transient occupancy City of Memphis Code of Ordinances |
| Registration Required | Yes — City of Memphis STR Property Permit required City of Memphis Code of Ordinances |
| Permit Cost | $300 initial application Avalara MyLodgeTax |
| Annual Renewal | $150 per year Avalara MyLodgeTax |
| Business License | Yes — City and Shelby County, $15 each Shelby County Business Tax Division |
| State STR License | Not required unless gross receipts >$100,000 RedAwning |
| Total Effective Lodging Tax | 8.5% (3.5% city + 5% county hotel-motel tax) Smart City Memphis |
| State Sales Tax | 7% Smart City Memphis |
| Local Option Sales Tax | 2.75% Smart City Memphis |
| Total Tax Burden (all taxes) | 13.25% Smart City Memphis |
| Permit Cap | Not codified — no city-wide cap in ordinance City of Memphis Code of Ordinances |
| Transferability | Not codified — transfer rules not specified City of Memphis Code of Ordinances |
| Occupancy Cap | 4 sleeping rooms per unit City of Memphis Code of Ordinances |
| Minimum Night Stay | Not codified — no city rule City of Memphis Code of Ordinances |
| Parking Requirement | Not codified — no city rule City of Memphis Code of Ordinances |
| Density Limit | Not codified — no city rule City of Memphis Code of Ordinances |
| Primary Residence Rule | Not codified — no city rule City of Memphis Code of Ordinances |
| HOA/Condo Override | Not codified — private covenants may apply City of Memphis Code of Ordinances |
| Inspection Requirement | Not codified — no city rule City of Memphis Code of Ordinances |
| Local Contact Requirement | Yes — agent/owner must be available and able to appear within 2 hours City of Memphis Code of Ordinances |
| Enforcement Penalties | $50/day per unit for unpermitted operation, plus court costs Steadily |
| Enforcement Method | Complaint-driven, AI-based monitoring in use Action News 5 |
| Last Updated | 2026-05-22 |
Regulatory Impact Snapshot
Underwriters should model compliance costs at 3.7% of gross revenue, with median Memphis, TN STRs earning $29,532 at an average daily rate of $155 and 48% occupancy. The compliance stack includes a $300 initial permit, $150 annual renewal, $30 in business license fees, and a 13.25% total tax burden (state, local, and lodging taxes). The binding constraint is the city’s active enforcement push, including AI-based monitoring and a high rate of unpermitted listings. Run this market in our Airbnb Calculator →
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Frequently Asked Questions
Basics
What is considered a short-term rental in Memphis?
A short-term rental is a residential unit or detached accessory dwelling with up to four sleeping rooms, rented for transient occupancy by guests City of Memphis Code of Ordinances.
Are short-term rentals legal in Memphis?
Yes, STRs are legal with a required city permit and compliance with local ordinances City of Memphis Code of Ordinances.
Does Memphis have a primary residence requirement for STRs?
No, there is no city-level primary residence or owner-occupancy requirement City of Memphis Code of Ordinances.
Licensing
Is a permit required to operate an STR in Memphis?
Yes, a City of Memphis Short Term Rental Property Permit is required City of Memphis Code of Ordinances.
How much does the STR permit cost?
The initial application fee is $300, with a $150 annual renewal Avalara MyLodgeTax.
Is there a cap on the number of STR permits?
No, Memphis does not codify a city-wide cap on STR permits City of Memphis Code of Ordinances.
Are STR permits transferable upon sale?
Transferability is not codified in city ordinance City of Memphis Code of Ordinances.
Do I need a business license?
Yes, both a City of Memphis and Shelby County business license are required, $15 each Shelby County Business Tax Division.
Taxes
What is the total lodging tax rate for STRs in Memphis?
The total effective lodging tax is 8.5% (3.5% city + 5% county) Smart City Memphis.
What is the total tax burden including sales tax?
The total tax burden is 13.25% (includes state and local sales taxes) Smart City Memphis.
Does Airbnb collect and remit taxes for Memphis hosts?
Yes, Airbnb collects and remits all required state, local, and occupancy taxes for Memphis listings Airbnb Help Center.
Do I need to collect taxes if I book outside Airbnb?
Yes, hosts must collect and remit all applicable taxes if bookings are made outside major platforms Tennessee Department of Revenue.
Operations
Is there a minimum night stay requirement?
No, Memphis does not codify a minimum night stay for STRs City of Memphis Code of Ordinances.
Are there parking or density requirements?
No, there are no city-level parking or density requirements for STRs City of Memphis Code of Ordinances.
Is a local contact required?
Yes, an agent or owner must be available and able to appear within two hours of city notification City of Memphis Code of Ordinances.
Are inspections required?
No, there is no city-mandated inspection or life-safety inspection for STRs City of Memphis Code of Ordinances.
Can HOAs or condos prohibit STRs?
The city does not enforce HOA or condo restrictions, but private covenants may still apply City of Memphis Code of Ordinances.
Enforcement
What are the penalties for operating without a permit?
A $50 per day per unit fine applies, plus court costs Steadily.
How is enforcement handled?
Enforcement is complaint-driven, with AI-based monitoring now in use Action News 5.
Are there recent changes to enforcement?
Yes, the city council is considering stricter enforcement and monitoring, with new resolutions advancing in 2026 Action News 5.
Are grandfathered STRs protected?
Yes, Tennessee law requires three warnings before punitive action, protecting many existing STRs Action News 5.
Permit Process
All Memphis STR operators must obtain a Short Term Rental Property Permit from the City of Memphis Permit Office before advertising or operating. The initial application fee is $300, with a $150 annual renewal. A business license from both the city and Shelby County is also required, each costing $15. There is no city-wide cap on permits, and transferability is not specified in the ordinance City of Memphis Code of Ordinances.
Zoning
Memphis defines STRs as residential units or detached ADUs with up to four sleeping rooms. The Unified Development Code governs zoning, but no specific zoning districts are codified for STRs in available sources. There are no city-level minimum night stay, parking, density, or primary residence requirements. HOA and condo restrictions are not enforced by the city, but private covenants may still apply City of Memphis Code of Ordinances.
Taxes and Remittance
STRs in Memphis are subject to a total lodging tax of 8.5% (3.5% city, 5% county), plus 7% state sales tax and 2.75% local option sales tax, totaling 13.25%. Airbnb collects and remits all required taxes for platform bookings. Hosts booking directly must collect and remit all applicable taxes themselves. Business licenses are required if gross receipts exceed $3,000, and state business tax applies above $100,000 Smart City Memphis.
Enforcement and Recent Actions
Operating without a permit can result in a $50 per day per unit fine, plus court costs. Enforcement is currently complaint-driven, but the city has begun using AI-based monitoring to identify unpermitted STRs. As of March 2026, 90% of STRs reportedly lack permits, and the city council is advancing resolutions to strengthen enforcement Action News 5.
Recent Changes and Pending Legislation
A 2023 ordinance established the current permit regime. In early 2026, a series of violent incidents at STRs prompted the city council to consider stricter enforcement and monitoring, including AI-based tools. A resolution to increase enforcement advanced in March 2026 but had not yet been enacted as of this writing Action News 5.
Comparable Markets
- Nashville, TN: Consider if you want a larger, more mature STR market with stricter caps.
- Knoxville, TN: Consider for a university-driven market with moderate regulation.
- Little Rock, AR: Consider for a lower-cost, less regulated alternative in the region.
- Birmingham, AL: Consider for a similar-sized city with evolving STR rules.
Sources
- City of Memphis Code of Ordinances (Draft Ordinance): https://memphis.granicus.com/MetaViewer.php?view_id=6&clip_id=5598&meta_id=303686
- City of Memphis Code of Ordinances: https://library.municode.com/tn/memphis/codes/code_of_ordinances
- Shelby County, TN – Official Website: https://www.shelbycountytn.gov/210/Geography
- Shelby County Business Tax Division: https://www.shelbycountytn.gov/559/Business-Tax-Division
- Shelby County, TN – Room Occupancy Taxes: https://www.shelbycountytn.gov/570/Room-Occupancy-Taxes
- Smart City Memphis: https://www.smartcitymemphis.com/2024/12/hotel-guests-pay-a-premium-to-visit-memphis/
- Smart City Memphis: https://www.smartcitymemphis.com/2025/02/memphis-nears-the-top-for-city-with-highest-hotel-motel-fees/
- Tennessee Department of Revenue (SUT-48): https://revenue.support.tn.gov/hc/en-us/articles/360058190432-SUT-48-Short-Term-Rentals-Reporting-Requirements
- Airbnb Help Center: https://www.airbnb.com/help/article/2330
- Avalara MyLodgeTax: https://www.avalara.com/mylodgetax/en/blog/2023/08/new-law-requires-memphis-str-hosts-to-have-permits.html
- RedAwning: https://www.redawning.com/pm/post/tennessee-airbnb-and-short-term-rental-regulations-2025-update
- Action News 5: https://www.actionnews5.com/2026/03/04/memphis-city-council-pushes-stricter-rules-short-term-rentals-after-recent-shootings/
- Action News 5: https://www.actionnews5.com/2026/03/04/neighbors-demand-action-memphis-city-council-after-repeated-violence-short-term-rentals/
- Steadily: https://www.steadily.com/blog/airbnb-short-term-rental-laws-regulations-memphis
- Steadily: https://www.steadily.com/blog/residential-zoning-laws-regulations-memphis
- CityApplications.com: http://www.cityapplications.com/business-licenses/TN-Tennessee/biz-Memphis.html
- City of Memphis Unified Development Code: https://www.develop901.com/udc
- MTAS – University of Tennessee Municipal Technical Advisory Service: https://www.mtas.tennessee.edu/reference/summary-short-term-rental-unit-act
- Tennessee Code § 13-7-603 (2024) – Justia: https://law.justia.com/codes/tennessee/title-13/chapter-7/part-6/section-13-7-603/
This page is research, not legal advice. Consult local counsel before acquiring or operating a short-term rental in City of Memphis, Shelby County, Tennessee.
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