Pigeon Forge cabins can be lucrative investments as short-term rental properties. Pigeon Forge and the surrounding area see millions of visitors each year, and cabins are some of the most popular accommodation options. Pigeon Forge cabin rentals can bring in revenue throughout the year, making them great investment opportunities. Before you start looking at Pigeon Forge cabins for sale, it’s important to make sure you understand how you will be taxed on this investment. Here are the primary types of taxes you can expect to pay on your short-term rental property.

Business Tax

When you purchase Pigeon Forge cabins for sale to use as short-term rental properties, you can expect to pay business tax on bookings. In the state of Tennessee, overnight rentals for less than 180 days are subject to this type of tax, including cabin rentals. This tax applies to gross receipts of all fees collected, which includes non-refundable deposits, damage protection, cleaning, etc. As an individual property owner, you must obtain a standard business license and are subject to pay business tax if your annual taxable gross sales exceed $100,000. For annual gross sales between $3,000 and $100,000, a minimal activity business license is required. If you will be renting through a property management company, that company will instead owe business taxes based on gross sales from short-term rentals.

Sales Tax

Sales tax is required when renting short-term rentals like Pigeon Forge cabins for less than 90 days. The Tennessee state sales tax rate is 7 percent, which must be added to the local Sevier County rate of 2.75 percent. Sales tax applies to all fees collected for the overnight rental as well as other money that a renter must pay for the accommodations, such as non-refundable deposits, cleaning fees, damage protection fees, guest booking fees, etc. If you decide to rent the property directly as the owner, you are responsible for collecting and remitting sales tax on cabin bookings. If you choose to rent through a property management company or marketplace facilitator, that company will be responsible for the sales tax.

Local Occupancy Tax

When investing in Pigeon Forge cabins for sale to use as short-term rentals, you should be aware of the local occupancy tax. The local occupancy tax is imposed by local governments for accommodations rented for less than 30 days. The city of Pigeon Forge has a local occupancy tax of 2.5 percent, while the unincorporated areas outside the city limits in Sevier County have a rate of 3 percent. If you will be renting the property yourself, you will be responsible for collecting and remitting local occupancy tax on cabin bookings directly to the local official. If you rent through a property management company, that company will be responsible for doing so. 

More About Investing in Pigeon Forge Cabins for Sale

These are the three main types of taxes you can expect to pay on short-term rentals in Pigeon Forge. If you are interested in investing in a rental property, it’s a great time to start looking at Pigeon Forge cabins for sale. As you start this process, make sure you check out these FAQs about investing in Pigeon Forge TN cabins for sale so you can know what to expect and make an informed decision as an investor.