The sale of personal property with real property happens all the time in real estate. There are typically 3 scenarios with this: 1) The items described as personal property in the Far Bar As-Is contract like the refrigerator and clothes washer and dryer are “thrown in” with the sale with no value assigned to them. 2) The Sellers sells a few personal property items (say a fancy Webber Grill they can’t take to the new condo) or the even the entire contents of the house as a bulk sale for $xx. Or, 3) Let’s pork the tax man and assign some of the agreed upon sales price to “personal property” and then we can keep the number on the deed low.
First, there is a Florida Department of Revenue Technical Dispute Resolution 18A-012 that covers this.
Let’s look at the first scenario where the Contract delineates the typical Personal Property included listed as “range(s)/oven(s), refrigerator(s), dishwasher(s), disposal, ceiling fan(s), intercom, light fixture(s), drapery rods and draperies, blinds, window treatments, smoke detector(s), garage door opener(s), security gate and other access devices, and storm shutters/panels (“Personal Property”).” Plus whatever gets written in such as wall hung TV’s. There is NO sales tax due on the transfer of these items as they are deemed to be “isolated” and “incidental” to the sale of the real property.
Scenario 2 gets slightly fuzzy as it depends on if the personal property was itemized and a separate value agreed upon or assigned to each item. If the Contract simply states something like “the contents” of the property then the answer is NO sales tax is due. However, if the items are listed out with prices agreed to for each or sold via differing bills of sale (as in a sale of boat and/or a car plus one for all the contents or the Picasso) then sales tax WOULD BE due on the sale of that personal property.
Scenario 3 (let’s pork the tax man) has one big question. Why go through the effort of something that is so pointless and may constitute one of, some of, or all of a tax, wire, mail or mortgage (if there was a loan involved) fraud. If your selling a house then why do you care if the Buyer pays a a little more real estate taxes? So you can not pay the doc stamps on the portion applied to non real property? If you’re buying then unless the house is worth north of about 5M the tax man DOES NOT look at the sale individually when assessing the market value. Values come from a mass appraisal process based upon the sales around you including yours. Are you really going to file a tax dispute and go in front of the valuation board and tell them I only paid 2M for the real estate, the other 1M was for the sofa and the Picasso. This would be FAR from something that was sold incidentally to the property. And, if the Broker received a commission on the personal property then they were involved in the sale and they were required to register as a dealer and collect the applicable sales tax.
REAL ESTATE BROKERS SHOULD REALLY THINK ABOUT THAT. THEY CAN ALLOW THE BUYER AND SELLER TO AGREE TO REDUCE THE PURCHASE PRICE OF THE REAL ESTATE AND NOT COLLECT A COMMISSION ON IT BUT NO ONE LIKES THE SOUND OF THAT. OR, IF THEY COLLECT A COMMISSION AND SOMEONE TURNS THEM IN OR THE TAX MAN GET’S WISE TO IT THEN THEY MAY BE LIABLE FOR THE (now) 7% SALES TAX DUE ON THE PERSONAL PROPERTY. And good luck trying to get the Buyer or the Seller to pay the sales tax after the sale is Closed.
I quoted the following from the tax document linked to above.
“Therefore, if tangible personal property is included in the sale of the real estate and a broker is utilized, sales tax is due on the sale of the tangible personal property if it is separately itemized and separately priced apart from the sale of the real property. The status of a broker’s duty to collect and remit sales tax on certain transactions in which such brokers participates is described in Rule 12A-1.066, F.A.C. In this rule, a broker is required to register as a dealer. A broker’s participation in the sale of real estate, which sale includes tangible personal property, requires that brokers charge the applicable sales tax on the sale of such tangible personal property when the item or items of tangible personal property are separately described and the sales price of such property is separately itemized in the sales contract, bill of sale, or other similar sales document. If the tangible personal property (as in this case) is not separately described and priced apart from the real property, the transaction is considered to be a sale of real property not subject to sales tax.”
“In summary, when a real estate broker sells tangible personal property in conjunction with the sale of real property, and where such tangible items are separately described and priced apart from the price of the real property, in the sales contract, bill of sale, or other tangible evidence documenting the sale, then tax will apply to the tangible items.”
