Norfolk House owner Andrew Simms, of Dunedin, has confirmed the guest home's doors will close to the public at the end of this month.
"The council have achieved nothing other than to close us down," he said.
The 90-year-old home would instead revert to a permanent residence for a visiting academic or other tenant, Mr Simms said.
He blamed the council's decision to confirm a switch from residential to commercial rates for a group of four bed and breakfast and guest homes in the city, including his own, more than tripling their rates bills in some cases.
Mr Simms bought the six-bedroom house in 2008 and had run it as a "hobby" since then, leasing the entire house - rather than individual rooms - to guests wanting to stay for short periods.
The house was empty for more than 300 days a year, but the change to commercial rates would have meant his annual bill rising from $2900 to $9800.
Mr Simms said the change made the operation "unviable", but rather than fight the council he would simply close the doors to customers.
"I simply don't have the time to engage in a lengthy battle with the council over it.
"If they want to close us down, then so be it."
Mr Simms said he had a clear understanding of commercial property as the managing director of The Landseer Group Ltd, which owned two Dunedin car yards and others nationally.
"That can't be compared with Norfolk House," he said.
Ultimately, the council's decision would only mean the public missed out on the chance to stay in one of the city's grand homes, he said.
"Not everyone wants to stay at the Scenic Circle."
Council rates and funding working party chairman Cr Chris Staynes said it was "unfortunate" the decision had been made to close Norfolk House.
"I didn't want to see anyone have to go out of the business of short-term stay [accommodation].
"But it's been made, I guess, on commercial grounds."
An assessment by Quotable Value staff - acting as the council's valuation agents - considered Norfolk House's rooms were available for commercial use at all times, even if they were not used at all times.
The council was "hamstrung" as it did not have a rating category between residential and commercial, which could suit properties like Norfolk House, he said.
Under existing policies, the council was obliged to charge commercial rates when QV assessed a property as a predominantly commercial operation, he said.
That would be reconsidered by the council's working party later this year, but any changes would only be seen next year.
Norfolk House's imminent closure follows two other B&B owners last week reiterating objections to paying commercial rates.
Fletcher Lodge owner Keith Rozecki-Pollard planned to appeal to the Ministry of Justice's Land Valuation Tribunal, while Lisburn House co-owner Alan Johnston feared he would have to close his restaurant to be reclassified as residential.
