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Ezel / Tax Rulings / VA
VA P.D. 10-223 Retail Sales and Use Tax 2010-09-22

Did Virginia sales tax apply to rentals of pools, a gymnasium, and outdoor sports facilities when no tangible property was included?

Short answer: No. The pools, indoor gymnasium, and outdoor sports facilities were real property rather than tangible personal property. Because the rentals for camps and team practices included no tangible property, the organization did not have to collect Virginia retail sales tax on those facility charges.

Apply this to your situation

This page answers the general question as of 2010. Ezel answers yours, under current Virginia tax law, with citations.

Currency note: this ruling is from 2010
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 an official published Ruling of the Virginia Tax Commissioner (Virginia Department of Taxation), issued as a redacted public document. It is based on the specific facts the taxpayer presented and the law in effect when issued; different facts or later changes in the law can change the result, and another taxpayer should not assume it applies to their situation. Virginia's retail sales and use tax is administered by the Department, but many Virginia local taxes, including the business license (BPOL) tax, business tangible personal property tax, and machinery and tools tax, are administered by local commissioners of the revenue. This summary is informational only and is not legal or tax advice. Consult a licensed Virginia tax professional about your specific situation.
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 as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Subject

The facilities are considered real property, not tangible personal property.

Plain-English summary

Rentals of the described sports facilities were not subject to Virginia retail sales tax. The organization rented pools, an indoor gymnasium or basketball court, and outdoor facilities such as tennis courts for sports camps and team practices.

Virginia found that those facilities were real property, not tangible personal property. Because the rental agreements did not include any tangible property, the organization did not have to collect and remit sales tax on the facility rentals.

What this means for you

  • Virginia retail sales tax generally applies to rentals of tangible personal property, not real estate.
  • The ruling depended on the facilities being real property and on no tangible property being included.
  • Adding equipment, supplies, or other property to a rental package could require a different analysis.

Common questions

Were the renters' nonprofit or exempt status important?

No. The ruling described the outside renters as non-exempt and based the result on the property classification.

Did the ruling cover rentals of sports equipment?

No. It expressly states that the facility rentals included no tangible personal property.

Citations and references

  • Va. Code §§ 58.1-603 and 58.1-602.
  • P.D. 92-141, cited for the treatment of real-property leases and attached fixtures.

Source

Original ruling text

September 22, 2010

Re: Request for Ruling: Retail Sales and Use Tax

Dear *:

This is in response to your letter submitted on behalf of * (the "Taxpayer"), in which you request a ruling on the application of the retail sales and use tax to the rental of its sports facilities.

FACTS

The Taxpayer's Department of Recreational Sports (the "department") rents real property to external, non-exempt, entities from time to time. Examples of the property being rented by the department include pools, an indoor gymnasium ( i.e. , basketball court), and outdoor sport facilities ( i.e. , tennis courts). The facilities are rented for such activities as sports camps and team practices. The rentals do not include any tangible personal property.

RULING

Virginia Code § 58.1-603 levies "a license or privilege tax upon every person who engages in the business of selling at retail or distributing tangible personal property in this Commonwealth, or who rents or furnishes any of the things or services taxable under this chapter, or who stores for use or consumption in this Commonwealth any item or article of tangible personal property as defined in this chapter, or who leases or rents such property within this Commonwealth ...." [Emphasis added.]

Virginia Code § 58.1-602 defines tangible personal property as "personal property which may be seen, weighed, measured, felt, or touched, or is in any other manner perceptible to the senses ...."

In Public Document (P.D.) 92-141 (8/10/92), the taxpayer leased a nursing home facility. The public document states, "the lease of real property and fixtures attached thereto is not subject to the sales tax."

The facilities described in the Taxpayer's ruling request are considered real property, not tangible personal property as defined in Va. Code § 58.1-602. Accordingly, pursuant to Va. Code § 58.1-603 and P.D. 92-141, the Taxpayer is not required to collect and remit the sales tax on the rental of the facilities at issue.

The response is based on the facts provided as summarized above. Any change in facts or the introduction of new facts may lead to a different result.

The Code of Virginia sections and public document cited are available on-line at www.tax.virginia.gov in the Tax Policy Library section of the Department's web site. If you have any questions about this response, you may contact * in the Department's Office of Tax Policy, Appeals and Rulings, at ***.

Sincerely,

Linda D. Foster

Deputy Tax Commissioner

AR/1-4506144029.P

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