🧪 TEST MODE ACTIVE Use test card: 4242 4242 4242 4242
Ezel / Tax Rulings / TX
TX 8801L0868B13 Sales and/or Use Tax (State,Local,MTA) 1988-01-27

When were real-estate appraisal fees taxable as insurance services rather than nontaxable financing services?

Short answer: An appraisal was taxable when used to value damages or estimate the quantity, value, or extent of property loss. A lender-required appraisal whose primary purpose was financing a loan was nontaxable because it was not insurance related.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is a taxpayer-specific January 1988 Texas Comptroller letter applying Rule 3.355. It says the opinion may change if the facts differ. The classification depends on the appraisal's primary purpose—insurance loss or damage versus financing—not simply the fact that real estate is valued. Appraisal, insurance-service, mortgage, damage, and financing rules may have changed; verify current law. STAR documents may no longer represent current policy even when not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Real-estate appraisals fell under the insurance-services analysis in Rule 3.355, but the tax result depended on what the appraisal did.

An appraisal used to value damages or estimate the quantity, value, or extent of property loss was taxable.

An appraisal not related to insurance was nontaxable. The letter's example was an appraisal required by a lender as a condition of extending credit: its primary purpose was financing the loan, so it was not taxable as an insurance service.

What this means for you

The historical classification followed the appraisal's purpose. The same type of property valuation could be taxable for loss adjustment and nontaxable for loan financing.

Common questions

Was a damage appraisal taxable? Yes.

Was a lender-required appraisal taxable? No, when its primary purpose was financing a loan.

Citations and references

  • 34 Tex. Admin. Code Rule 3.355 — historical insurance-services rule.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

January 27, 1988

Dear ****:

On behalf of Mr. Bullock, I hope you'll accept my apology for the delay
in answering your question involving changes in the sales tax law. This isn't
the way we normally do business.

Our people were, and still are, swamped by a deluge of inquiries as they
attempted to interpret provisions of the new law and draft rules which would
not adversely impact businesses. In many instances, an answer to a question
just wasn't available when the question arrived.

Real estate appraisals fall under insurance services Rule 3.355 for sales
tax purposes. Taxability of this service is determined by what is done.

If these services are performed for purposes of valuing damages or
estimating quantity, value, or extent of loss of property, sales tax is due on
the fee charged.

On the other hand, if these services are not insurance related, no tax is
due. For example, charges for an appraisal required by a lender as a
condition for extending credit is not taxable as an insurance service because
the primary purpose for your service is financing the loan.

I will send a copy of Rule 3.355 for Insurance Services under separate
cover for your information.

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 Telephone Bank Operations.

Sincerely,
Raul Cruz
Telephone Bank Operations

Get today's answer for your situation

You just read a 1988 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.