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Construction Contracts with Designated Exempt Entities - Items Remaining Taxable With the Exemption Certificate Option

Contractors Will Continue to Pay Sales Tax On Items that Do Not Become Part of the Realty Being Constructed.

Examples include:

  • Barricades
  • Building equipment*
  • Compressors
  • Cranes
  • Drill press
  • Dynamite
  • Electric generators
  • Forms
  • Fuel
  • Hand tools
  • Lathes
  • Lodging
  • Machinery*
  • Pile drivers
  • Replacement parts for equipment
  • Scaffolds
  • Stakes
  • Tools
  • Utilities
  • Vehicles, including grading, lifting and excavating vehicles
  • Warning lights

* Machinery or other equipment that remains tangible personal property rather than becoming part of real property may be purchased by the contractor tax free for resale. However, it must be separately itemized and transferred to the exempt entity.

Certain construction-related equipment purchased by contractors is not subject to local option tax but is subject to a state 5% excise tax.

Rental of Construction Equipment

The contractor must pay sales tax on any building equipment that is purchased by them but may rent certain building equipment exempt from sales tax if conditions are met.

Rental of the following is exempt when used in new construction, reconstruction, alteration, expansion, or remodeling:

  • Self-propelled building equipment (does not include vehicles subject to registration)
  • Self-constructed cranes
  • Pile drivers
  • Structural concrete forms
  • Regular and motorized scaffolding
  • Generators
  • Attachments customarily drawn or attached to the above
  • Auxiliary attachments which improve the performance, safety, operation or efficiency of the equipment and replacement parts
  • Compressors
  • Drill presses
  • Forms other than structural concrete forms
  • Tools, including hand tools
  • Lathes