Exemption for Fuel Sold for Residential Use Does Not Apply to Secondary Residences

Oil, propane, coal, peat, steam, wood, and fuel cubes produced from solid waste sold as fuel for residential use are exempt from Wisconsin sales and use tax.

"Residential use" means in a structure or portion of a structure which is a person's permanent principal residence, but does not include use in transient accommodations, motor homes, travel trailers, or other recreational vehicles. Use in a residence includes heating or cooling the premises, heating water, operating fans or other motors, providing lighting, and other ordinary uses by the purchaser in a residence.

"Residential use" includes use in single-family homes, duplexes, townhouses, condominiums, mobile homes, rooming houses, apartment houses, nursing homes, and farm houses, if the structure is used as a person's permanent principal residence. "Residential use" includes apartment houses, nursing homes, and farm houses, even if they are on a commercial or rural meter.

Fuel that is used in a person's secondary residence (e.g., summer home, cabin) does not qualify for exemption. However, if the secondary residence is another person's primary permanent residence, the exemption may apply.

Example: An individual owns two houses. The first house is the individual's permanent principal residence. The second house serves as a primary permanent residence for another family. Since both houses are used as a person's primary permanent residence, the exemption for fuel sold for residential use applies to fuel for both houses.

The following are examples of fuel that is sold for "residential use" that is exempt if used in a person's permanent principal residence (this list is not all-inclusive):

  • A garage heater
  • A backyard swimming pool
  • A gas grill
  • A whirlpool or sauna

The following are examples of fuel that is not sold for "residential use" (this list is not all-inclusive):

  • A garage heater at a secondary residence
  • A recreational vehicle
  • A pool at a health club
  • A garage where a trade or business is carried on

What records should a seller obtain?

If 100% of the fuel sold to a customer in Wisconsin is for use in a person's primary permanent residence or for farm use, an exemption certificate is not required. However, the seller must maintain adequate records to identify which sales are exempt. If for any reason the fuel is not 100% exempt from Wisconsin sales and use tax, then an exemption certificate must be completed by the customer and kept on file by the seller. Sellers of fuel should always have an exemption certificate on file for sales to manufacturers who claim some or all of their fuel is exempt from Wisconsin sales and use tax.

When a sales and use tax exemption certificate is not required to be obtained by the seller, the seller is still required to maintain adequate records to identify which sales are exempt. Acceptable "adequate records" would include asking each customer if the fuel is being purchased for use in the person's permanent residence and doing one of the following:

  • Recording that the sale of the fuel is for "residential use" on the invoice;
  • Pushing a certain register key that keeps a record indicating that the sale of the fuel is for residential use; or
  • Noting on the customer's credit application that the customer states the fuel is for use in his or her permanent residence.

October 31, 2016