Top Airbnb Cities in Tennessee: Best Places Like Nashville for Tax Advantages

By: Sam Leonardo | Jun 28, 2025

Why Tennessee is an Airbnb Investor’s Dream



Tennessee offers the ideal blend of profit potential, strong tourism, and investor-friendly policies.

With no state income tax, Airbnb hosts keep more of their earnings—significantly boosting net returns, especially on high-performing properties. Pair that with affordable real estate and strong appreciation, and you have a market built for growth.

Tourism is booming year-round—from the Smoky Mountains to Nashville’s music scene and Memphis’ cultural draws. Consistent demand means steady bookings across seasons.

Unlike areas with strict or vague STR rules, Tennessee stands out for its clear, local regulations that make short-term rentals easy to manage. Many cities have transparent permitting and zoning systems in place.

Whether you're eyeing urban hotspots like East Nashville or family-friendly destinations like Pigeon Forge, Tennessee offers diverse markets to match your investment goals.

Why investors are choosing Tennessee:

• No state income tax = higher profit margins
• Year-round tourism = consistent occupancy
• Clear local STR laws = operational confidence
• Market variety = options for every strategy
• Strong appreciation & tax advantages

For short-term rental investors, Tennessee isn’t just viable—it’s thriving.

Gatlinburg – Property Performance with Tax Benefits in the Smokies



Gatlinburg consistently ranks among the most profitable cities for Airbnb hosts in the Southeast. Located at the doorstep of the Great Smoky Mountains National Park, it draws millions of visitors annually who are looking for rustic charm and scenic escapes.

For investors, Gatlinburg offers a dependable stream of bookings with some of the highest occupancy rates in the region. Luxury cabins, romantic chalets, and group-friendly vacation homes are in constant demand.

Market Snapshot:

• Vacation rental occupancy rate: High year-round
• Property value appreciation: Strong and steady
• Local STR regulations: Clear, accessible, and favorable

Tax Benefits:

• No state income tax
• Competitive Sevier County property tax rate
• Local lodging taxes are balanced by consistently premium nightly rates

Whether you're listing a cozy retreat or a sprawling mountaintop estate, Gatlinburg delivers rental performance that justifies the investment.

Pigeon Forge – A Top Market for Family-Focused Term Rentals

Pigeon Forge, just down the road from Gatlinburg, has carved out its own niche as a destination for family fun. From Dollywood to dinner shows and theme parks, the city is built for tourism—and Airbnb owners benefit directly.

Pigeon Forge tends to attract larger groups and families seeking affordable but memorable stays, making it ideal for multi-bedroom properties and amenity-rich rentals. Investors appreciate its mix of steady demand and approachable pricing.

Rental Market Strengths:

• High guest turnover driven by attractions and seasonal events
• Balanced property prices make entry easier
• Excellent guest satisfaction scores fuel repeat short term bookings

Investor-Friendly Features:

• Extensive tax deductions for STR-related operating expenses
• Permitting is straightforward and manageable
• A strong local economy supports consistent STR activity



If you’re looking for dependable returns in a city that thrives on hospitality, Pigeon Forge is a can’t-miss opportunity.

Chattanooga – Mid-Term and Short-Term Rentals in a Growing City

Chattanooga blends Southern charm with progressive energy. Known for its tech-forward infrastructure, revitalized downtown, and breathtaking natural surroundings, this city has become a magnet for young professionals, creatives, and weekend airbnbs wanderers alike.



The short-term rental scene in Chattanooga is rising steadily, bolstered by clear zoning laws and increasing demand from urban and outdoor travelers.

City Advantages:

• STR-friendly neighborhoods with clearly defined zones
• Natural attractions like Lookout Mountain and the Tennessee River enhance appeal
• Ongoing real estate development points to long-term appreciation

Tax and Market Benefits:

• Mid-range properties offer solid ROI
• Multiple neighborhoods consistently outperform on Airbnb platforms
• Short-term and mid-term rentals both thrive here, expanding investor options

Chattanooga is perfect for those seeking a modern city market with strong fundamentals and room to grow.

Nashville – Premium Property and High Rental Rates

Nashville remains a powerhouse for Airbnb hosts, thanks to its global tourism appeal and unmatched event calendar. From music festivals to corporate conventions, demand for short-term stays rarely dips.



While the city has tightened short-term rental regulations, savvy investors can still thrive by targeting the right neighborhoods and understanding local permitting zones.

Top Performing Areas:

• East Nashville for artsy, eclectic appeal
• The Gulch for upscale, walkable stays
• 12 South and Germantown for boutique charm

What to Know:

• STR permits are specific to property type and zone—do your homework
• Peak seasons around major events yield premium nightly rates
• Many hosts leverage professional management for compliance and optimization

Tax Considerations:

• Local occupancy and privilege taxes apply but are manageable
• Higher home prices mean larger upfront investment, but income offsets costs
• Full access to STR-related tax deductions keeps net profits strong

Nashville is not the easiest city to enter—but for those who do it right, it remains one of the most lucrative Airbnb markets in the Southeast.

Knoxville – Tax-Friendly Homes in a Growing Vacation Rental Market

Knoxville may not have the spotlight like Nashville or Gatlinburg, but it's quietly building a strong case for Airbnb investment. As a college town and gateway to the Smokies, it enjoys steady demand from diverse traveler types.

The local real estate market is still accessible, and many investors find Knoxville ideal for launching their first Airbnb property or expanding an existing portfolio.

Rental Market Features:

• Stable demand from university visitors and regional tourism
• Consistently high guest ratings and repeat stays
• Increasing number of events and downtown revitalization projects

Investor Upside:

• Lower acquisition costs make the math work faster
• Property taxes remain moderate
• Airbnb regulations are clear and host-supportive

For a mix of affordability, demand, and ease of entry, Knoxville is one of Tennessee’s most promising under-the-radar cities.

Clarksville & Beyond – Entry-Level Investment with Clear Tax Advantages

Clarksville and emerging hubs like Johnson City and Murfreesboro offer new Airbnb investors an excellent point of entry. These cities combine lower home prices, favorable tax environments, and untapped short-term rental potential.



With universities, military installations, and regional tourism all fueling demand, these areas are growing fast—and so is interest from hosts.

Advantages for Investors:

• Low competition means more visibility on platforms like Airbnb
• Appreciation potential in developing neighborhoods
• Reliable rental income from events, schools, and business travel

Tax & Financial Perks:

• Lower property tax rates than major metros
• Still eligible for the full range of STR deductions
• Easier permitting and fewer local restrictions

These secondary markets may not have the buzz of big-name destinations, but they pack plenty of potential for solid, steady returns—and may be your smartest investment yet.

Final Thoughts: Choosing the Right Tennessee City for Your Airbnb Business

Every investor has a different vision—whether it's passive income from a cozy cabin or building a high-end vacation rental portfolio. Fortunately, Tennessee offers the full spectrum. From Gatlinburg's unbeatable tourism numbers to Chattanooga’s urban growth analysis and Clarksville’s affordability, each city brings something unique to the table.

What matters most is aligning your investment goals with the right market. Do you want high nightly rates and steady bookings? Focus on tourism-heavy cities. Prefer long-term appreciation and lower startup costs? Consider secondary cities with room to grow.

Summary Takeaways:

• Prioritize cities with clear STR zoning and efficient permitting
• Target locations with consistent, year-round travel demand
• Leverage tax advantages and property deductions strategically
• Match your property type to guest expectations in each market



At Home Team Luxury, we specialize in helping investors identify the best-fit markets, acquire standout properties, investment property, and maximize Airbnb performance. Ready to elevate your STR portfolio in Tennessee? Connect with us today for expert guidance tailored to your goals.