Does a real estate agent or firm owe Texas sales tax on market analyses, feasibility studies, and property inspection reports sold to clients?

Subject

Real Estate Multiple Listing — Information Services

Plain-English summary

A taxpayer asked the Comptroller whether three real-estate-related services were subject to Texas sales tax: (1) a real estate market analysis, (2) a real estate development feasibility study, and (3) the service of a real estate inspector. All three produce a written document for the customer, but the Comptroller drew a line based on what the document actually contains.

Producing data on sold or listed properties -- for example, pulling together multiple-listing information for a given area, subdivision, or other criteria -- is taxable as an information service. But giving an opinion of value or feasibility (as in a market analysis or feasibility study that goes beyond raw data) is not taxable. Separately, the service of a real estate inspector, including the inspector's written report, is not taxable at all.

What this means for you

Real estate agents, brokers, and appraisers

If you sell a product that is mostly a compilation of comparable sales or listing data (a "comp pull" or multiple-listing data report), that charge is likely a taxable information service. If instead your market analysis or feasibility study delivers your professional opinion of value or feasibility, that charge is not taxable, even though the result is also a written document.

Real estate inspectors

Inspection services and the written inspection report you provide to a client are not taxable under this letter.

Accountants and tax professionals

The distinguishing factor here is not the format (a written report in all three cases) but the substance: raw compiled property data equals taxable information service, while professional opinions of value/feasibility and inspection services are not taxable.

Common questions

Q: Is a real estate market analysis taxable in Texas?
A: Not if it provides an opinion of value or feasibility. If it's simply a compilation of sold or listed property data, it is taxable as an information service.

Q: Is a home inspection report taxable?
A: No. This letter states the service of a real estate inspector, including the written report, is not taxable.

Q: What made the multiple-listing data taxable?
A: Producing data on sold or listed properties for a given area, subdivision, or other criteria is treated as an information service, which is a taxable category under Texas sales tax law.

Citations and references

No statutes or rules were cited by name in 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/9605L1410G13

Original ruling text

May 13, 1996

Dear ***:

Thank you for your letter dated May 13, 1996, concerning the taxability
of a real estate market analysis, real estate development feasibility study,
and the service of a real estate inspector. All of the services produce a
written document containing the information to the customer.

Producing data of sold or listed properties for given areas, subdivisions,
or other criteria, is taxable as an information service. Providing an
opinion of value or feasibility is not taxable.

The service provided by a real estate inspector and providing a written
report is not taxable.

This opinion is based on the facts you presented and current law. Different
facts although similar, may result in different answers.

Please call me if you have any questions or need more information. Our toll
free number is 1-800-531-5441, and my extension is 5-0330. The direct line
is 512/475-0330. You may also write to Tax Policy Division, Comptroller of
Public Accounts.

Sincerely,

Bettie Peterson
Tax Policy Division

NOTE: Previous Accession Number 9605979L