The sale and installation of a security or alarm system incorporated into real property is a construction contract. The charge to the customer is not taxable.

If you incorporate the system into real property, you must pay sales and use tax on the cost of all materials, supplies, and equipment used.

Security systems that are not incorporated into real property are taxable retail sales.

You must charge sales tax on the following:

• Delivery and installation charges
• Peripheral equipment (free-standing units or TV monitors) that are connected to a wall or baseboard outlets
• Any other transactions necessary to complete the sale

You may purchase security items that are not incorporated into real property exempt from sales tax. Give your vendor a completed Form ST3, Certificate of Exemption. Specify the Resale exemption.

If you lease a security system, you must charge sales tax on each lease payment.

You may purchase the security systems exempt from sales tax by giving your vendor a completed Form ST3, Certificate of Exemption. Specify the Resale exemption.