Sales by a Contractor
- The sale of tangible personal property is
taxable, unless an exemption applies.
Example A contractor sells painted or stained trim and baseboards, without installation. This sale is subject to tax.
- The sale and installation of tangible personal property that becomes an addition or capital improvement of real property when installed* is a
nontaxable real property construction activity.
Example A contractor is hired to supply and install painted or stained trim and baseboards in a building. This sale is not subject to tax.
*Note Tangible personal property installed in a commercial facility which primarily serves a business or process function retains its character as tangible personal property regardless of the extent that it is affixed to real property.
- The sale of a repair, service, alteration, fitting, cleaning, painting, coating, inspection, or maintenance of tangible personal property that is affixed to real property,* or is installed by the contractor at the completion of the service, is a
nontaxable real property construction activity.
Example A contractor is hired to stain rails and install them on a staircase. This sale is not subject to tax.
*Note Although services to real property are generally not subject to tax, there are certain types of property that are treated as tangible personal property for purposes of repair or other service to that property. Repair and other services to these items are taxable, regardless of the extent that they are attached to or fastened to real property. A complete list of these "deemed items" can be found in Part 3.A of
Publication 207, Sales and Use Tax Information for Contractors.
- The sale of a repair, service, alteration, fitting, cleaning, painting, coating, inspection, or maintenance of tangible personal property that is not affixed to real property, or is not installed by the contractor at the completion of the service is a
taxable service to tangible personal property.
Example A contractor is hired to paint trim and baseboards for another contractor who will then install the property in a building. This sale is subject to tax, unless an exemption applies.
Purchase of Materials by a Contractor
- A contractor selling or performing a service to tangible personal property may purchase materials transferred to the customer without tax, for resale.
- A contractor selling or performing a real property construction activity must pay tax on the purchase of materials used in providing the real property construction activity, unless an exemption applies.
Determining Whether an Item Is Tangible Personal Property or Real Property
Publication 207,
Sales and Use Tax Information for Contractors, provides explanations and examples to help determine the tax treatment of services provided by contractors.
If you have questions about the sales or use tax treatment of a transaction, contact (608) 266‑2776 or
DORSalesandUseTax@wisconsin.gov
Note: This document interprets provisions within secs. 77.51 and 77.52, Wis. Stats.; and sec. Tax 11.68, Wis. Adm. Code.
May 6, 2019