Search Category: Sales Tax
Buying Tangible Personal Property for Renting and Leasing
This section covers buying property that you’ll rent out or lease out.
Bare rentals
Any entity that makes bare rentals can buy the property exempt for resale using 
Form ST-101 – Sales Tax Resale or Exemption Certificate.
Fully operated rentals
Owners that make fully operated rentals are the users of the property. They must pay sales tax on the property when they buy it.
Used in both bare and fully operated rentals
You’ll need to determine how you’ll primarily be renting out your property when you buy it. You must pay sales tax on the property based on your primary rental activity.
- Property you buy primarily for bare equipment rentals isn’t taxable.
- Property you buy primarily for fully operated rentals is taxable.
If you buy property primarily for bare rentals
You could owe use tax if you buy property for bare rental then use it in a fully operated rental. You’ll owe use tax on the fair market rental value of the property purchased for resale for the period you use it to provide a fully operated rental service.
Occasionally, a customer asks you to provide an operator along with the tractor. This is a fully operated rental service, and you owe use tax on the property’s use. You didn’t pay sales tax on the property, so you owe use tax on the amount you charge DIY customers for the rental period your operator uses it.
If you buy property primarily for fully operated rentals
You can’t apply for a refund of sales tax if you pay tax on property to use in fully operated equipment rentals, but you then rent it out as bare equipment.
Trading In – Renting and Leasing Tangible Personal Property
Trading in property to rent or lease other property
Lessees of property can trade in other property as partial payment for property they’ll lease. Retailers can reduce the taxable sales price by a trade-in allowance. Trade-in allowances can’t reduce the taxable sales price on rentals or leases between anyone else, such as private parties.
There are three methods to apply the trade-in allowance and calculate tax due.
- Option A: Subtract the trade-in allowance from the cost of the leased or rented property to reduce all monthly payments. The retailer charges tax on each payment.
- Option B: Use the trade-in allowance as the initial payments for the leased or rented property until the unapplied trade-in allowance is zero. The retailer doesn’t charge tax on those payments.
- Option C: A combination of these two methods.
Calculate tax on the three methods described above as follows:
Option A
Reducing all monthly payments. Kelly and OK Vans use the trade-in allowance to reduce the lease value from $12,000 to $8,000. The payments are $222.22 per month for 36 months. OK Vans charges sales tax on each $222.22 payment.
| Value of van | Trade-in allowance | Financed amount | Lease term in months | Payment amount subject to tax |
|---|---|---|---|---|
| $12,000 | $4,000 | $8,000 | 36 | $222.22 |
Option B
Eliminating initial payments. Kelly and OK Vans apply the $4,000 trade-in allowance as full payment for the first 12 months of the lease. OK Vans doesn’t charge tax on the $0 payments. At the end of 12 months, the remaining lease value is $8,000. Kelly pays $333 per month plus tax for the final 24 months of the lease.
| Value of van | Trade-in allowance | Financed amount | Lease term in months | Number of months with $0 payment | Remaining months subject to tax | Payment amount subject to tax (for remaining 24 months) |
|---|---|---|---|---|---|---|
| $12,000 | $4,000 | $12,000 | 36 | 12 | 24 | $333.33 |
Option C
Combining the two methods. Kelly and OK Vans apply $3,000 of the trade-in allowance as a down payment to reduce the lease value to $9,000. The payments are $250 per month for 36 months. They apply the remaining $1,000 of the trade-in allowance to the first four monthly payments of $250. OK Vans charges tax on each $250 payment for the remaining 32 months.
| Value of van | Trade-in allowance taken initially | Financed amount | Lease term in months | Number of months with $0 payment | Remaining months subject to tax | Payment amount subject to tax (for remaining 32 months) |
|---|---|---|---|---|---|---|
| $12,000 | $3,000 | $9,000 | 36 | 4 | 32 | $250 |
Trading in leased property to buy other property
Lessees of property can assign the residual buyout amount of the property as a trade-in allowance on property they buy. Retailers can reduce the taxable sales price by a trade-in allowance if the residual buyout value is more than the trade-in allowance:
- If the residual buyout amount of the leased property is more than the trade-in allowance the retailer offers, the taxable sales price is reduced by the difference.
- If the residual buyout amount of the leased property is equal to or less than the trade-in allowance the retailer offers, the trade-in allowance doesn’t reduce the taxable sales price.
- The first retailer offers a trade-in allowance of $11,000 for the console. In this situation, the console’s trade-in allowance is $1,000 more than the residual buyout amount. This reduces the taxable sales price by $1,000. The retailer charges tax on $14,000.
- The second retailer offers a trade-in allowance of $9,000 for the console. In this situation, the trade-in allowance is $1,000 less than the residual buyout amount, so the trade-in doesn’t reduce the taxable sales price. The retailer charges tax on $15,000.
Note: Trade-in allowances can’t reduce the taxable sales price on rentals or leases between anyone else, such as private parties.
Leasing and renting – specific issues
See the following guides for leasing and renting information on specific issues.
- Renting out or leasing out real property: “Hotels, Motels and Short-Term Rentals“
- Renting out or leasing out vehicles or aircraft:
Renting and Leasing Tangible Personal Property: Recordkeeping
You must keep records of all your rentals, leases and purchases for at least four years. The records must show that you properly collected, reported and paid or forwarded taxes to Idaho.
Records to keep
- Normal books of account
- Documents that support entries in the books of account
Examples:- Bills
- Receipts
- Invoices
- Credits granted
- Lease contracts
- All schedules or working papers used to prepare your tax returns
- Copies of sales tax resale or exemption certificates
Keep resale or exemption certificates for as long as the company does business with that buyer, plus four years. We’ll bill you for tax due if you don’t have completed exemption certificates for buyers you sell to tax exempt. - Tax returns
- Tax payments
What the records must show
- Gross receipts from sales and services made in Idaho, even sales that you or your customer might consider exempt from tax. If you deliver the product or service somewhere other than your place of business, you also must keep records that prove where delivery took place.
- The identity of customers claiming an exemption, the type of exemption, and what you sold them tax exempt.
- All deductions claimed in filing returns.
- The total purchase price of anything bought for sale, rental, lease, or your own use.
- The amount of sales tax collected from your customer or that you paid to a vendor.
You must keep all sales and use tax records and exemption certificates for at least four years. You should keep them for seven years if you don’t file returns.
Laws and Rules for Renting and Leasing Tangible Personal Property
Learn more about renting and leasing tangible personal property:
- Rentals or Leases of Tangible Personal Property — Sales Tax Rule 024
- Retailer — Idaho Code section 63-3610, Sales Tax Rules 018 and 068
- Sale — Idaho Code section 63-3612
- Retail Sale – Sale at Retail — Idaho Code section 63-3609, Sales Tax Rule 011
- Tangible Personal Property — Idaho Code section 63-3616
- Promoter Sponsored Events — Idaho Code section 63-3620C, Sales Tax Rule 130
- Certificates for Resale and Other Exemption Claims — Idaho Code section 63-3622, Sales Tax Rule 128
- Returns and Payments — Idaho Code section 63-3623
- Sales Price — Idaho Code section 63-3613, Sales Tax Rules 043 and 049
- Trade-Ins, Trade-Downs and Barter — Sales Tax Rule 044
- Exemptions On Purchases By Political Subdivisions, Sales By The State Of Idaho, Its Departements, Institutions, And All Other Political Subdivisions — Sales Tax Rule 094
Renting and Leasing Tangible Personal Property: Basics Guide
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.
Wholesalers Basics Guide
If you’re a wholesaler and only sell to resellers, you can buy goods you’ll sell without paying sales tax (tax exempt).
Wholesaler defined
A wholesaler can be an individual, a business, a nonprofit organization, or a government agency. A wholesaler:
- Only sells goods to a customer who will resell them, or
- Only leases goods to a company that will lease or rent the goods to someone else
Buying Goods for Resale – Wholesalers
Form ST-101
If you buy goods for resale from Idaho sellers, you must give them a completed Form ST-101 – Sales Tax Resale or Exemption Certificate.
Fill in the form:
- Write the name and address of both the seller and your business at the top of the form.
- In section 1 “Buying for Resale,” line a — write the nature of your business and describe the products you sell.
- On line b — check the second box that says “Wholesale only; no retail sales”. Wholesalers don’t need a permit to buy exempt for resale.
- Under “Buyer” at the bottom of the page — sign the form. Fill in the rest of the fields (name, title, EIN or driver’s license information, and date).
Out-of-state businesses
If you’re an out-of-state business that buys from registered Idaho retailers, you can give them a completed Uniform Sales and Use Tax Certificate – Multijurisdiction instead of form ST-101.
Fill in the form:
- Write the name and address of both the seller and your business at the top of the form.
- Check the box for “Wholesaler.”
- Write “Wholesale sales only” in the section that asks for your permit number.
Note: If you have an Idaho permit, write it in the permit number section. - Sign and fill out the bottom of the form.
The seller should keep the certificate and not charge tax on your future qualifying purchases.
Pay tax on goods you won’t resell
You must pay tax on items you buy that aren’t for resale to your customers.
Examples
- Warehouse shelving, equipment, and supplies
- Merchandise display racks
- Cash registers
- Cash register tape and sales invoices
- Flyers handed out to customers
- Advertising inserts
- Office equipment and supplies
- Goods you take from your resale inventory to use yourself or give away
Selling Goods – Wholesalers
Selling to resellers
Wholesalers can sell goods without collecting tax from customers who will resell the goods. If the customers won’t resell all the goods, you must collect tax on the items they won’t resell. (See Selling at retail below.) To sell goods to a customer without collecting tax:
- Your customer must give you a completed Form ST-101 – Sales Tax Resale or Exemption Certificate
- Keep the certificate and don’t charge tax on future qualifying sales to the customer
The resale/exemption certificate must have all areas that apply completed, and be signed and dated.
Selling at retail
If you only make wholesale sales, you don’t need a seller’s permit. But if you sell to customers that don’t resell all the goods you sell them, you’re acting as a retailer for those sales. Retailers must get an Idaho seller’s permit and collect sales tax. Read more on our Retailers page.
Wholesalers Recordkeeping
You must keep records of all the purchases and sales your business makes. Your records must show that taxes have been properly reported and forwarded to the Tax Commission.
Records you must keep
- Normal accounting books (which can include information stored on computers). Normal records include general ledgers, sales journals, purchases journals, etc.
- Documents that support entries in the books of account.
Examples:
- Receipts
- Customer invoices and credit granted for returned items
- Cash register tapes
- Job/work orders
- Contracts
- Purchasing records
- Bank and credit card statements
- Tax returns and all schedules or working papers used to prepare the returns
- Copies of sales tax resale or exemption certificates. Keep certificates as long as the buyer is a customer, plus four years.
What the records must show
- Gross receipts from sales and services made in Idaho – even sales that you or your customer may consider exempt from tax. If you deliver the product or service somewhere other than your place of business, you must also keep records that prove where delivery took place.
- The identity of customers claiming an exemption, the type of exemption, and what was sold exempt
- All untaxed sales claimed on tax returns
- The total purchase price of anything bought for sale, rental, lease, or your own use
- The amount of sales tax collected from your customer or that you paid to a vendor
Keep all sales and use tax records for at least four years.
- You must keep all sales and use tax records for at least four years unless you have written permission from the Tax Commission to destroy them.
- If you don’t have an Idaho seller’s permit number, you’ll need to keep your records for seven years.
Laws and Rules for Wholesalers
Learn more about wholesalers:
- Retail Sale – Sale at Retail — Idaho Code section 63-3609; Sales Tax Rule 011
- Retailer — Idaho Code section 63-3610; Sales Tax Rules 018 and 068
- Retailer Engaged in Business in this State — Idaho Code section 63-3611
- Substantial Nexus — Idaho Code section 63-3615A
- Permits – Issuance – Revocation – Penalties — Idaho Code section 63-3620; Sales Tax Rules 070, 122, and 123
- Exemptions – Exemption and Resale Certificates – Penalties — Idaho Code section 63-3622; Sales Tax Rule 128
- Returns and Payments — Idaho Code section 63-3623
- Taxes as State Money — Idaho Code section 63-3623A
- Responsibility for Tax — Idaho Code section 63-3627; Sales Tax Rule 118
- Administration — Idaho Code section 63-3624; Sales Tax Rule 111