For sales tax purposes, livestock confinement systems are generally separated into three categories: building, exempt equipment, and taxable equipment.
Building
The basic structure is treated as real property including walls, roof, foundation, and electrical wiring that serves the general building.
- Materials to build the basic structure are taxable. This applies whether the builder is a contractor, owner or lessor, or is hired by an exempt entity.
- Payments for leasing the building are not taxable.
Exempt Equipment
Exempt items include:
- Components for feeding and watering systems
- Certain livestock handling equipment
- Ventilation systems that directly affect the health and productivity of the livestock
- Other items that are considered farm machinery
A contractor may purchase the materials to build qualifying equipment that becomes real property exempt from tax.
Taxable Equipment
Taxable items are generally considered personal property (rather than real property). Sales or leases of these items are taxable. Examples include:
- Free stall partitions
- Gates
- Interior pens
- Poultry cages
- Stalls
- Slotted flooring
- Ventilator fans for general building ventilation