Renting and Leasing Tangible Personal Property
This guide explains sales and use tax requirements for anyone who rents out or leases out their tangible personal property in Idaho to others.
Tangible personal property
"Tangible personal property" means personal property that can be seen, weighed, measured, felt or touched, or perceived in any way by the senses. See Idaho Code section 63-3616.
Tangible personal property includes vehicles, boats, equipment, clothing and many other things. You can rent out or lease out most tangible personal property for a specific period.
Renting out property
For tax purposes, rental of tangible personal property is considered a sale. There are two types of rentals:
- Bare equipment rentals. These are taxable.
- Fully operated equipment rentals. These aren't taxable.
Bare equipment rentals
A bare equipment rental is when the owner rents out only the property, and the person who rents that property will operate it. The owner charges tax on:
- The rental charge, no matter how it's determined (e.g., by the hour, by the week, by mileage)
- Any charges related to using the property
- Tire wear
- Blade sharpening
- Mandatory damage waiver
- Mandatory warranty
- Supplies provided with the rental
- Cleaning charges agreed to as part of the rental
- Labor charges to prepare the equipment for the customer's specifications
- Environmental fees, except those a federal government agency imposes
- Fuel sold to the customer when motor vehicle tax is not paid on the fuel (e.g., dyed diesel)
- Damage charges when the customer returns the property
Owners sometimes add personal property tax to the rental or lease fee. It's taxable unless all of the following apply:
- The owner separately stated the property tax in the charge to the lessee.
- The lease agreement is for an initial period of one year or more.
- The amount the owner charged isn't more than the property tax the lessor pays.
Bare rental with service fee
Some rentals include both a bare rental charge and a nontaxable service fee. In these rentals, tax is due on the personal property. The services might not be taxable if they're a significant portion of the cost of the rental contract and are separately stated. Nontaxable services must be personal or professional, and not related to creating or altering the property rented.
- Renting out a garbage container and providing a service to empty the container
- Renting out portable toilets and providing a service to clean the units
In these situations, the customer uses the property between servicing, so it's a bare rental of the property. Owners shouldn't charge tax on service charges if they're separately stated on the invoice.
You're a retailer if you make bare rentals. You must collect tax unless your customer qualifies for an exemption and provides a completed Form ST-101, Sales Tax Resale or Exemption Certificate. Read more about requirements in our Retailers guide.
Fully operated equipment rentals
With fully operated equipment rentals, the owner of the property rents the equipment out and supplies someone to operate it throughout the rental period. This is a service and isn't taxable.
- A crane and operator to lift wood into place
- A calibrator and technician to perform the calibration