Rental Property Investor · Liverpool, NY · Member since 2015 · 156 posts · 25 votes
Whats up BP???
Looking to see if any house flippers have tried to file for sales tax exemption through there business at Lowes , Home Depot or any other big box store?
While I was in Lowes the other day one of the employees mentioned this to me. Was wondering if any body has dealt with this? What forms the big box stores needed? and how the process went for you...
Accountant · Plymouth Meeting, PA · Member since 2015 · 12 posts · 6 votes
10y
Hey There - very generally speaking, you need to present the vendor with a Sale Tax Exemption Certificate, and these are specific by the state you operate in. For NY, the form can be form here: https://www.tax.ny.gov/pdf/current_forms/st/st121_...
You need to specify on the form WHY you are not required to pay sales tax on the purchases you/your company makes, and there are a few options. Take a look at the form, and hit me back if you want to discuss your situation specifically.
Investor/Accountant/Builder · Meno, OK · Member since 2014 · 1k+ posts · 918 votes
10y
I don't see it being legal. Sales tax exemption is for those purchasing items for resale, where the sale tax is taken at the point of resale(or for non-profits like churches)
You do not collect sales tax when you sell the flip(or flop)
Investor and CPA · Arvada, CO · Member since 2015 · 2k+ posts · 3k+ votes
10y
@Arlan Potter - the sales tax exemption is also used for components used in assembly. If you've got a pile of parts to assemble into a finished good, you don't pay sales tax when you buy the parts.
That said, I have not heard of this tactic for flipping. Has anybody used this with success? I see it working in theory, but have not heard of it in practice.
Investor · Panama City, FL · Member since 2015 · 378 posts · 183 votes
10y
@Linda Weygant Sales tax is collected on the end user. The component rule is assuming your assembling a product for sale that you will then collect sales tax on. For example your buying building materials to build a dog house that you will sell and to an end user and collect sales tax. There is no tax on sale of real property sales so you are required to pay sales tax on building material in the use and construction of real property. Hope this helps, Good Luck!
@Linda Weygant Sales tax is collected on the end user. The component rule is assuming your assembling a product for sale that you will then collect sales tax on. For example your buying building materials to build a dog house that you will sell and to an end user and collect sales tax. There is no tax on sale of real property sales so you are required to pay sales tax on building material in the use and construction of real property. Hope this helps, Good Luck!
Thanks Cameron. I figured it was along those lines, but my google-fu was not working properly.