1. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

   1. (1) Portable building--A self-contained transportable structure which does not require attachment to a foundation or to realty in order to be functional. An example of a portable building is a toolshed.
   2. (2) Prefabricated building--A structure, not designed to be a residential dwelling, built at a location other than its permanent site, which is later transported in one or more sections and affixed to realty.
   3. (3) Ready-built home--A structure which does not bear a label or decal issued by the Texas Department of Labor and Standards or the U.S. Department of Housing and Urban Development but which is designed to be a residential dwelling, precut, partially assembled, or fabricated in whole or in part at a location other than the homesite, which is later transported in one or more sections and assembled on a permanent foundation.
   4. (4) The terms ready-built home, prefabricated building, and portable building do not include a house trailer which is defined as a motor vehicle in and subject to the provisions of the Texas Tax Code, Chapter 152, or a manufactured home as defined in and subject to the provisions of Texas Tax Code, Chapter 158.

2. (b) Application of the sales tax.

   1. (1) A sale of a portable building is a taxable sale of tangible personal property. Sales tax is due on the total sales price, excluding separately stated delivery charges.
   2. (2) Homes with labels or decals, as described in subsection (a)(3) of this section, are not subject to the limited sales and use taxes but are subject to the manufactured housing sales and use taxes.
   3. (3) A contract to sell a prefabricated building or a ready-built home is considered a contract for an improvement to realty when the seller is required to build, transport, and affix the structure to a permanent site. See §3. 347 of this title (relating to Improvements to Realty). If the contract requires the seller to perform services such as preparing the foundation, plumbing, sewer hookup, septic tank preparation, supporting, blocking, or leveling, the seller's sales tax responsibilities are determined by whether or not the contract is lump sum or separated. See §3.291 of this title (relating to Contractors).
   4. (4) The sale of a ready-built home or a prefabricated building which is not at the time of sale affixed to its permanent site, is a taxable sale of tangible personal property if sold to a person responsible for affixing the structure to realty.
   5. (5) A sale of a structure which is affixed to realty is nonetheless a taxable sale of tangible personal property if the purchaser is obligated to remove the structure from its site.

   6. (6) An "in-place" sale of items such as fixtures, machinery, and equipment is considered a sale of personal property if the seller:

      1. (A) is a lessee of the real estate or building to which the items are affixed; and
      2. (B) has the present right to remove the items either as trade fixtures or under the express terms of the lease. Sales tax is due on that portion of the total consideration allocable to the in-place items without regard to the fact of their physical attachment to real property.

3. (c) Parts and accessories added to manufactured housing by the retailer. Limited sales or use tax is due on parts or accessories installed by the retailer in a manufactured home.

   1. (1) If the retailer sells the home for a lump sum amount which includes both the home and parts, the retailer should not collect limited sales or use tax on the lump sum charge. The retailer must pay limited sales or use tax on the parts at the time of purchase.
   2. (2) If the retailer separates the charge to the customer into the charge for the home and a separate charge for the additional parts, the retailer must collect limited sales tax on the amount charged for the parts. The retailer may issue a resale certificate in lieu of tax when purchasing the parts.
   3. (3) If a third party sells and installs the items, the installer's sales tax responsibilities will also be determined by the type of contract, either lump sum or separated, under which the items are installed. See paragraphs (1) and (2) of this subsection.

Source Note:The provisions of this §3.306 adopted to be effective January 1, 1976; amended to be effective October 7, 1980, 5 TexReg 3842; amended to be effective October 13, 1982, 7 TexReg 3497.