Sales and Use Tax on Construction, Improvements, Installations and Repairs - GT-800067 R.09/14 - Guidance

Sep 19, 2026

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Guidance explains how sales and use tax applies to construction-related activities in Florida, focusing on property improvements, installations, and repairs. It helps determine when buyers must pay sales and use tax for parts and materials, when contractors should charge tax to customers, and what documentation supports tax-exempt purchases. Key terms and classifications—such as real property, fixtures, and tangible personal property—are defined, alongside contract types and examples showing tax treatment.

LanguageEnglish

CategoryForms

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Pages6

Reading Time2 min

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Sales and Use Tax on Construction, Improvements, Installations and Repairs

Definitions

Real Property

Types of Contracts

Use of Materials

Construction for Tax-Exempt Entities

Sales and Use Tax on Construction, Improvements, Installations and Repairs GT-800067 R.09/14 In Florida, the taxing of property improvements, installation, and repairs varies according to the exact nature of the transaction. This publication can help you determine: • If you need to pay sales and use tax when you buy parts and materials. • If you need to charge tax to your customers. It will also explain what documentation you need to buy parts and materials tax-exempt. Definitions Real property—The land, its improvements, and fixtures; also called “realty” and “real estate.”Improvements to real property—include the activities of building, erecting, constructing, altering, improving, repairing, or maintaining real property. Fixture—An item that is permanently attached to the realty, building, other structure, or land, that keeps its separate identity after installation. All repairs are treated as repairs to real property. The term “fixture” does not include titled property, machinery, or equipment. Tangible personal property—Personal property that you can see, weigh, measure, touch, or is in any manner perceptible to the senses, but not permanently attached to real property. Fabricated cost—The cost to a real property contractor to fabricate an item. This includes direct materials, labor, and other costs that are allocated to production. Fabricated items—Items contractors manufacture, produce, process, compound, or fabricate for their own use in performing contracts for improvements to real property. Real Property Generally, transactions that involve items that are permanently installed into a structure, where they cannot be removed without destroying them, are classified as real property and are not subject to sales tax. You should also consider the pricing arrangement in the contract when determining whether to charge tax. Examples of Real Property • Carpeting (permanent) • Carpentry • Dock, pier, seawall • Driveway • Electrical system • Elevator, escalator • Landscaping • Masonry work • Roofing • Tile Types of Contracts Under lump sum, cost plus, fixed fee, guaranteed price, or time-and-materials real property contracts, the contractor is the final consumer of materials and supplies and: • Must pay sales tax to suppliers on all purchases, including those made for the contractor’s own use. • Should not charge tax to the customer. Contractors who perform taxable fabrication must pay use tax on the fabricated cost of the items fabricated. When calculating use tax on the cost of items of tangible personal property manufactured, produced, compounded, processed, or fabricated, the contractor should: • Include the cost of the direct materials used to fabricate an item if the contractor did not pay tax to the materials vendor on the purchase of the materials. • Exclude the cost of the direct materials if the contractor paid tax when it purchased the materials. Retail sale plus installation contracts are contracts for improvements to real property where the contractor or subcontractor lists and prices in the contract all materials to be used before the work begins. The contractor or subcontractor also must agree to: • Sell specifically described and listed materials and supplies at an agreed price or regular retail price, and • Complete the work for either an additional agreed price or based on time used. Since the sale of the materials is a separate transaction from the installation, the customer must assume title and risk the loss of the materials and supplies as delivered, rather than accepting only title to the completed work. A contractor who performs retail sale plus installation contracts: • Should buy the materials tax-exempt for resale. • Should charge the customer tax on all materials. Use of Materials Tax is due on the use of goods by the contractor. The contractor is responsible for the tax if sales tax was not paid at the time of purchase.

FAQs

When do contractors need to charge or pay sales and use tax for construction jobs?

Tax requirements depend on the nature of the transaction and contract structure. Contractors generally must pay sales tax to suppliers but should not charge tax to customers under lump sum, cost plus, fixed fee, guaranteed price, or time-and-materials real property contracts.

What items are considered real property and not subject to sales tax?

Transactions involving items permanently installed so they cannot be removed without damage are classified as real property and generally are not subject to sales tax. Examples include carpeting (permanent), flooring-related work, electrical systems, roofing, and masonry work.

What documentation is required to buy materials tax-exempt for tax-exempt entities?

The tax-exempt entity must issue a purchase order and a copy of its exemption certificate, pay the vendor directly, and take title to materials upon delivery while assuming the risk of loss. The vendor must invoice the entity and receive the purchase order and exemption certificate before shipment or delivery.

Sep 19, 2026

Upload by Stanley