Understanding Sales Tax for Residential PersonalReal Property

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Understanding the differences between tangible personal property and real property in a residential setting can be difficult. This video will help clarify the difference for contractors doing business in Wisconsin. • For more information visit the Wisconsin Department of Revenue website http://www.revenue.wi.gov • Transcript: • Understanding the differences between tangible personal property and real property in a residential setting can be difficult. • Real property is generally permanent, such as a house, driveway, fence or garage. If you are a contractor and you're working on real property, this means you are the consumer of the materials and you pay sales or use tax when you purchase the materials. When it's real property, you don't charge your customer sales tax. • Tangible personal property is property not permanently attached to real property such as furniture, curtains and portable appliances. If you are a contractor and you're working on tangible personal property, you are the retailer. That means you don't pay sales or use tax when you purchase the materials but you charge your customer sales tax on the labor and materials. • Here are some additional real property items: • Land • Walls • Roof • Deck • Sidewalk, and • Fence • Landscaping is a taxable service. That means these items outside the house are treated like tangible personal property and sales tax is charged to the customer: • Shrubs • Flower beds • Trees, and • Sod • Here are some items inside the house that are real property when installed: • Hardwood floors • Staircases • Ceiling fans, and • Built in appliances like dishwashers, furnaces and water heaters are real property when they're installed. • Here are some items inside the house that are tangible personal property: • Furniture, lamps and curtains • Portable appliances, such as refrigerators and stoves. • Although real property when installed, these are some items considered tangible personal property when repaired: • Furnaces • Water heaters and • Dishwashers • Remember, if you are a contractor performing real property improvements, you are the consumer of the materials and you must pay the sales tax on those purchases. You don't charge your customer sales tax. • • If you are working on tangible personal property you are the retailer of those materials. You don't pay sales tax on your purchases but you do charge your customer sales tax on labor and materials, unless the customer can claim an exemption. • We hope you found this information helpful. • This video is meant to be a brief overview of tangible vs. real property for residential purposes. For more detailed information, visit our website, revenue.wi.gov. Search pub 207 to view sales tax information for contractors. Look for the handy reference chart at the back of this publication for helpful information on tangible and real property. You can also search, pub 210 for more information on landscaping services. • Thank you for watching.

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