Question for all pool builders!

When you sell a pool contract to a customer, do you typically charge sales tax on the price of the pool? So, let's say the price of the pool is $50,000, are you charging say 8% sales tax as part of that lump sum? (so $50,000 x 8% = $4,000 sales tax and $46,000 cost of goods/services)?

This is important because I am trying to do my taxes and trying to validate something my pool company is telling me. This is the State of Texas and I would assume sales tax is part of the purchase price.

In Texas there is no sales tax on residential real property construction or improvement.

I would also like to know that. What is the pool guy telling you? That taxes are part of the price?

I'd love to be able to deduct sales tax for the pool.

Saw a van driving down the road yesterday with this in shoe polish on their back windshield:

www.wehateourlagunapool.com

Jess, is this a fact, opinion? Are you aware of any links to validate your statement? Only reason I ask is I have searched and haven't found anything yet...

I am going to go check the state web site again. Thanks.

Ok, I just found an interesting article.

http://texas.construction.com/opinions/finance/archive/2004/0410.asp

quote:

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Texas does not tax new commercial construction labor (only incorporated materials) but does tax remodeling materials and labor for commercial buildings. In order to effectively administer sales tax a contractor should know how their project will be classified by the state.

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quote:

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Texas defines remodeling as "to rebuild, replace, alter, modify or upgrade existing real property." Adding a new floor to an existing building would be considered new construction, while relocating a wall to create new square footage is remodeling. Lifting a ceiling is only new construction if it creates new, usable square footage.

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quote:

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New construction is defined as "all new improvements to real property including initial finish-out work to the interior or exterior of the improvement." Finishing out existing office space that was previously used as storage or occupied by a tenant is not considered new construction.

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So, from this reading, since it is a new exterior improvement to an existing real property, then this qualifies as new construction and does not have any sales tax.

Am I reading this correctly?

This article is also dated 2004. I would like to find something more recent.

I really wish the pool builders would weigh in... I know they are out there on this forum.

This is from a 2008 article on the state of Texas website:


http://www.window.state.tx.us/taxinfo/taxpubs/tx96_237_2_08.html

quote:

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Dive Right In: Swimming Pool Cleaning and Repairs
An in-ground pool or spa permanently attached to real property is considered an improvement to real property. Therefore, in-ground swimming pool and spa cleaning services are taxable real property services under Texas Tax Code Section 151.0101 and Comptroller Rule 3.356(a)(7). Sales tax is due on the total charge for in-ground pool and spa cleaning services, including charges for labor and supplies. The service provider may issue a resale certificate to a supplier to purchase tax free the chemicals that will be left in a customer's pool, but should pay tax on items like chemical testing kits, pool vacuums, screens and brushes that are used to perform the service.

Charges for repairs to in-ground pools and spas are taxed differently from cleaning services. For residential in-ground pools or spas, no sales tax is due on labor to repair a pool liner, pump, filter or heating system. Under a separated contract, which has materials billed separately from labor, the repairperson is considered the retailer of all materials physically incorporated into the pool or spa. The repairperson is reselling those materials and must collect sales tax from the customer on any incorporated parts and materials. The repairperson may purchase these items tax free by providing suppliers a properly completed resale certificate in lieu of paying the tax. If the repairperson paid tax on purchases of incorporated materials (instead of purchasing them tax-free), the repairperson would still be required to collect tax from the customer on the materials, but would be allowed a credit on the sales tax return for taxes paid on those materials.

Under a lump-sum contract or, the labor and materials are billed as a single charge. The repairperson may not charge sales tax to the customer for residential pool or spa repair. However, the lump-sum charge may be set to cover all the costs the repairperson incurs, including the tax paid on the incorporated materials. The repairperson owes tax on all the incorporated materials when purchased from suppliers, unless the repairperson also maintains a tax-free inventory of the items for sale.

See Comptroller Rule 3.291 for information about the repair or remodeling of residential real property by contractors.

For nonresidential or commercial in-ground pools or spas, such as those found at hotels or health clubs, the total charge (including labor and parts) to repair the pool is taxable. See Rule 3.357 for more information regarding repair, remodeling and restoration of nonresidential real property.

Above-ground pools and spas without a permanent attachment to realty (such as decking or in-ground plumbing to fill and drain the pool or spa) are considered tangible personal property. The total charge (including labor and materials) to install or repair such an above-ground pool or spa is taxable on both residential and nonresidential property. See Rule 3.292 for more information about the repair, remodeling, maintenance and restoration of tangible personal property.

The Texas Resale Certificate, Form 01-339 (Front), is required to properly document items purchased for resale.

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Oh, whoops... looks like that last post from the state website is about pool cleaning services only...

Bottom line, looks like those of us who built a pool this past year in Texas did not get charged Sales Tax and cannot deduct it from income taxes.

You paid sales tax on your pool equipment (polaris, pump, filter, chlorinator, etc.). You did not pay sales tax on anything else.

Hope that helps.

Pool builder likely billed all of that as a lump sum price for pool and equipment (eg 50k). As such, by Texas law, pool builder is the consumer and you the purchaser didn't technically pay sales tax on the retail purchase of tangible property.

Texas offers a nice regulation if anyone wants some late night reading. Ch 34 of Texas Admin Code rule 3.291 - Contractors.

Jess96 has it nailed.

[This message has been edited by jefe95 (edited 2/4/2009 4:26p).]