You cannot inherit a short-term rental permit

This is the most expensive assumption in Nashville real estate right now, and it turns up in listings every week. A house is advertised with short-term rental income, or a seller mentions their permit, and a buyer underwrites the purchase as though that income conveys with the house. It does not.

Metro issues two kinds of short-term rental property permit. Owner-occupied, where the owner is a natural person permanently residing at the property and rents up to four sleeping rooms. And not-owner-occupied, which is the one most investors are counting on. An LLC, a corporation, a trust or a partnership cannot hold an owner-occupied permit at all.

Zoning decides whether the investor version is even on the table, and across most of Nashville it is not. Metro states it plainly: new not-owner-occupied permits are not permitted in AR2A, R, RS or RM zoned properties. That covers essentially every ordinary residential neighborhood in Davidson County. The districts where a new one is available are the mixed use, office, commercial, downtown and shopping center districts. If you are buying a house on a residential street and your plan requires a non-owner-occupied permit, there is no path to one.

Now the part that catches even the buyers who checked the zoning. The permit is not attached to the property. Metro is explicit that the permit is non-transferable, and that a change in the ownership of a property results in the cancellation of the permit. That language reaches further than a sale. Metro gives the example itself: moving title from a person to a trust or an LLC, or back the other way, cancels it.

So a grandfathered non-owner-occupied permit in a residential district, which is a real thing sitting on real houses, dies at your closing. Metro says existing holders in those districts may be eligible to apply for renewals, but that those permits are not transferable if the property is sold or transferred. State law lands in the same place. The Short-Term Rental Unit Act protects a property lawfully used as a short-term rental before an ordinance was enacted, but only until the property is sold or transferred.

A Metro permit is also not the last gate, and buyers of condominiums and horizontal property regimes should read this twice. The application itself requires the applicant to confirm that operating would not violate a homeowners association agreement, a condominium or co-op agreement, a lease, or any recorded covenant. Metro’s own published answer on whether an association may be stricter than Metro is yes. A master deed can prohibit short-term rental outright while the zoning permits it.

The operating rules, for anyone who does qualify. Occupancy is capped at twice the number of permitted sleeping rooms plus four, to a maximum of twelve, with no more than four sleeping rooms on a permit. One party under one contract. A permit expires three hundred sixty-five days after it is issued and has to be renewed before it expires, with the fee, current proof of property insurance, and documentation that the hotel occupancy tax was paid. The fee is $313. Not-owner-occupied permits also carry a one million dollar minimum liability insurance requirement and a local responsible party within twenty-five miles, available around the clock.

Two recent changes are worth knowing before you plan around any of this. The ordinance now governing Chapter 6.28 took effect in November 2024 and tightened what counts as proof that an owner actually lives at the property, down to documents matching the recorded deed. And as of December 2025, owner-occupied short-term rental is not a permitted use in a newly constructed detached accessory dwelling unit on single-family or residential limited lots, which closes the build a backyard unit and rent it route for new construction.

Before you underwrite a house on short-term rental income, send me the address. I will pull the zoning on that specific parcel, find out whether the use is available there at all, and read the master deed or the covenants if there are any. That answer takes about a day, and it is the difference between an investment and a very expensive house.