Is an elevator or wheelchair lift installed in my home exempt from Texas sales tax if my doctor prescribes it?

Subject

Elevator Or Wheelchair Lift — Installed In Residence/Home — Qualifies As Therapeutic Equipment If Sold Via Separated Contract With Medical Prescription

Plain-English summary

A homeowner asked the Comptroller whether an elevator or wheelchair lift installed in a residence is subject to Texas sales tax. The Comptroller explained that the lift or elevator itself can be purchased tax-free as a therapeutic device, but only if two things happen: (1) the customer's doctor provides a written prescription plus a signed statement describing the medical need for the lift, and (2) the customer gives the seller a completed exemption certificate along with those documents.

Whether the exemption is actually usable, though, depends on how the contract for installation is structured:

• Lump-sum contract (one price covers the lift/elevator plus labor and materials to install it): the whole job is treated as a nontaxable residential remodeling service, so the therapeutic-device exemption cannot be used. Instead, the contractor -- not the homeowner -- owes tax on the materials and consumables used on the job (paid when purchased, or accrued from a tax-free inventory), and the lump-sum charge to the homeowner is not taxed at all.
• Separated contract (labor and materials billed separately): the medical exemption is available. The contractor can accept the exemption certificate instead of charging tax on the lift or elevator itself, but must still charge the homeowner sales tax on the other materials incorporated into the home during installation. The labor charge itself remains nontaxable either way.

What this means for you

Homeowners installing a prescribed lift or elevator

Ask your doctor for a written prescription and a signed statement of medical necessity, and give an exemption certificate to the seller. But also pay attention to how your contract is written: a separated labor/materials contract is what actually lets you use the exemption on the lift or elevator. Under a lump-sum contract, you won't be charged tax on anything (the contractor absorbs it), but you also can't apply the medical exemption because it isn't needed in that structure.

Contractors who install home lifts or elevators

Your tax obligations differ by contract type. Under a lump-sum contract, you owe tax on the materials and consumables you use for the job (or accrue tax from tax-free inventory) and you don't collect any tax from the customer. Under a separated contract, you can accept a customer's exemption certificate (with prescription and medical statement) to sell the lift/elevator itself tax-free, but you must collect tax from the customer on other incorporated materials -- while remodeling labor stays untaxed in both structures.

Common questions

Q: Do I need anything besides a doctor's note to buy the lift tax-free?
A: Yes. The letter requires both a written prescription and a signed statement from the doctor specifying the medical need, plus an exemption certificate given to the seller.

Q: Is the labor to remodel my home for the lift ever taxable?
A: No -- the letter states labor to remodel a home to accommodate the lift or elevator is not taxable, regardless of contract type.

Q: Why would a lump-sum contract prevent me from using the medical exemption?
A: Because under a lump-sum contract, the entire job (lift, materials, and labor) is treated as a single nontaxable residential remodeling service sold by the contractor -- there's no separate taxable sale of the lift to which the exemption certificate could apply. Instead, the contractor pays tax on the materials/consumables directly.

Citations and references

No specific statutes or rules were cited in the body of this letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9603L1407F13

Original ruling text

March 28, 1996

Dear ** :

Thank you for your letter of March 19, 1996. You asked
whether an elevator or wheelchair lift installed in your home is taxable.

The elevator or wheelchair lift can qualify for
exemption as a therapeutic device. To qualify for the exemption, your doctor
must provide you with a written prescription for the item and a signed
statement specifying the medical requirements for the lift or elevator. You
should provide these documents and an exemption certificate to the seller to
purchase the lift or elevator tax free.

The labor to remodel your home to accommodate the lift
or elevator is not taxable. Any materials, other than the lift or elevator,
incorporated in the realty are taxable. The tax on these materials may be
handled in one of two ways depending on the type of contract entered into with
the contractor.

Under a lump-sum contract, the contractor owes tax at
the time of purchase on the materials incorporated into your home or may accrue
tax on materials removed from a valid tax-free inventory. The lump-sum
contractor also owes tax on all consumable materials and equipment bought,
leased, or rented for use on the job. The lump-sum charge to you is not
taxable. I should point out that if you enter into a lump-sum contract with a
contractor to provide the lift or elevator and the labor and materials
necessary to install it, the above medical exemption will not be available. In
this situation, the contractor is considered to be selling a nontaxable
residential remodeling service.

Under a contract separately stating labor and
materials, the above medical exemption is available. The contractor may accept
the exemption certificate in lieu of collecting tax on the lift or elevator.
However, the contractor must collect tax from you on the price for the
incorporated materials used to install the lift or elevator. Again, the labor
to remodel your home is not taxable.

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

You may call me toll free at 1-800-531-5441, ext. 5-0037. The direct line is
512/475-0037. You also may write to Sales Tax Policy Division, Comptroller
of Public Accounts.

Sincerely,

Lindey Osborne
Sales Tax Policy Division

NOTE: Previous Accession Number 9603158L