Sales Tax Attorney Austin TX
Is there sales tax on labor for residential rental property repairs in Texas
Labor to repair, remodel, or restore residential real property is not taxable…there’s a BUT coming up!
Residential real property means family dwellings, including apartment complexes, nursing homes, condominiums, and retirement homes. It does not include hotels or residential properties rented for periods of less than 30 days (the BUT). (See below Code (a)(12))
So, if the rental properties you renovate are long-term rentals, labor is not taxable. However, if those are short-term Airbnb rentals, labor is taxable (assuming the stay is less than 30 days)
If it is a short-term rental, it is treated as a commercial property job. The whole invoice is sales taxable.
Under long-term rentals, there are 2 ways of invoicing customers (See below Code (b)(3)(4))
- Lumpsum Invoices
The lump sum invoice does not separately list labor and materials.
You will pay all the taxes when you buy the materials needed for the jobs. Then, you will charge your customers a total for the job on the invoice, like “renovations”. No sales tax is needed.
- Separate Invoices
The separate invoice lists labor and materials separately.
You do not pay any taxes when you buy the materials needed for the jobs. You issue a resale certificate.
Then, you will charge your customers an itemized invoice for the job, like “renovations- materials” and “renovations- labor.” Sales tax needs to be added to the “renovations- materials”.
Sales Tax Attorney Austin TX
