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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.