Knoxville, TN Accessory Structures: ADU Rental Restrictions (2026)

Knoxville's Short-Term Rental Unit ordinance under City Code Chapter 16, Article XV - effective January 2018 - regulates rentals of less than 30 days at a time. The ordinance distinguishes Type 1 (Owner-Occupied) permits, available citywide, from Type 2 (Non-Owner-Occupied) permits, which are restricted in residential RN zones and primarily permitted in mixed-use and commercial districts. An ADU used as a short-term rental in a residential zone must be operated as a Type 1, with the owner occupying either the main house or the ADU. Long-term leases of 30 days or more are permitted under Recode Article 10 as long as the owner-occupancy rule is met. STRU applicants must submit proof of ownership, residency documentation, off-street parking confirmation, and pay annual permit fees. Tennessee Code Annotated 13-7-602 et seq. (the Short-Term Rental Unit Act, effective 2019) preempts cities from banning STRs that lawfully operated before the city's first STR ordinance, but allows registration, taxation, and reasonable regulation. Knoxville hotel/motel tax (3%) and Tennessee state sales tax (9.25% combined state and local) apply to STR revenue.