Did anchoring, plumbing, and wiring a rented prefabricated building make it real property for Texas tax purposes?

Plain-English summary

The client rented a prefabricated building for use as a temporary bank facility and planned to keep it on the site for one or two years. The building and land were rented from separate parties, and the building was under an operating lease.

The Comptroller applied the primary intent test: whether the person making the attachment intended the item to become a permanent part of the land. These facts showed no permanent intent, so the building remained tangible personal property even though it was anchored, plumbed, and wired for electricity.

What this means for you

Physical attachment alone did not control. The temporary term, separate lease structure, and operating-lease treatment supported personal-property classification.

Common questions

Was the building real property? No.

Did anchoring it to the ground change that? No, not on these facts.

What other connections existed? Plumbing and electrical wiring.

What test did the Comptroller use? Whether the annexing party intended a permanent accession to the land.

Citations and references

• No statute or rule number is cited in the ruling text.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8706L0821A05

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK June 25, 1987
Comptroller

Dear ***:

Thank you for your recent letter regarding the taxability of a prefabri-
cated building for use as a temporary bank facility.

In determining if tangible personal property placed upon land is
considered real property the primary test is: Was it the intention of
the party making the annexation that the chattel should become a
permanent accession to the freehold?

In your client's circumstances the intent, as stated in your letter, is
to place the building on the real property for one or two years. In a
telephone conversation June 23, 1987 you explained the building and land
are being leased/rented by your client from two separate entities.
This, coupled with the fact that the building is being rented under an
operating lease, further indicates the building is not intended to
become a permanent accession to the land.

Based on the above, the building in question is determined to be
tangible personal property even though it has been anchored to the
ground, plumbed, and wired for electricity.

This opinion is based on the facts presented. If there are additional
or different facts, the opinion may change.

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,
Sandi Skaggs
Tax Policy Section
Tax Administration Division