Were refrigerators, ranges, and washing machines taxable when a contractor installed them and included their cost in a long-term home mortgage?

Plain-English summary

A home seller included a refrigerator and gas range in the purchase, financed over the same 30-year loan as the house. Other transactions also included washing machines.

Sales-tax counsel concluded that the contractor made taxable retail sales of the appliances. Tax was measured by the contractor's gross receipts from those sales, with the auditor's stated allowances for tax reimbursement paid to the appliance vendor and amounts paid for gas and water connections.

The result did not change because the appliance cost was included in the mortgage, installation occurred before the buyer received beneficial title, utility pipes or rubber hoses firmly connected the appliances, or cabinet spaces were specially designed for them.

Common questions

Did including appliance costs in the real-estate mortgage make them part of the realty?

No. The financing method did not change the taxable retail sale.

Did installation before title passed matter?

No. The memorandum expressly treated that timing as immaterial.

Did utility connections or fitted cabinet spaces change the result?

No. Those facts did not prevent taxation of the appliance sale.

Citations and references

• No statute, regulation, or case was cited in the supporting memorandum.

Source

• Annotated Legal Opinions collection: https://cdtfa.ca.gov/taxes-and-fees/annotations-menu.htm
• Annotation page: https://cdtfa.ca.gov/lawguides/vol2/suta/150-0000-all.html
• Original supporting opinion: https://cdtfa.ca.gov/lawguides/annotations/150-0020.pdf

Original ruling text

STATE BOARD OF EQUALIZATION
OFFICE CORRESPONDENCE

150.0020
Date:

July 10, 1958

To:

Oakland – Auditing (RRG)

From:

Headquarters – Sales Tax Counsel (JDP)

Re:

B--- A--- and P--- A---, Inc.
[city]

With your memorandum of July 2 you submitted a copy of a deposit receipt issued by the B--A--- and P--- A---, Inc., to its prospective buyer of a house. Included with the house, to be paid for over the period of the thirtyyear loan, is a G.E. refrigerator and gas range. You inquire whether or not the seller of the house is making a taxable retail sale of the appliances. In other cases such appliances as washing machines are also included. We believe that the tax applies to whatever are the contractor’s gross receipts from the sale of the appliances. You are correct in making an allowance for tax reimbursement paid to the vendor of the appliances and the amounts paid for the attachment to gas and water outlets. For purposes of the sales tax law it is immaterial that the cost of the appliances are included in the real estate mortgage; that the appliances are installed before the buyer receives the beneficial title to the property; that the appliances are firmly attached to the realty by the gas pipes or rubber water connections or that the spaces between cabinets are specifically designed to accommodate the particular appliances. Accordingly, it is our opinion that you may proceed with the audit as suggested in your memorandum.

Jack D. Paulson
JDP:vad