If a doctor prescribes an in-ground swimming pool for physical therapy, is building it exempt from Texas sales tax the way a prescribed spa can be?

Plain-English summary

A person with severe back problems, whose doctor prescribed physical therapy in a swimming pool deep enough to tread water with a flotation device (exercises that couldn't be done in a spa), asked whether a physician's prescription exempts an in-ground swimming pool from sales tax the same way it's understood spas can be exempt.

The Comptroller's answer: no. The therapeutic-device exemption in Rule 3.284(c)(8) covers spas, but an in-ground swimming pool is a permanent improvement to realty, and neither Tex. Tax Code § 151.313 (Health Care Supplies) nor Rule 3.284 contains any provision exempting permanent real property improvements — a physician's prescription doesn't change that. So the materials used to build a residential swimming pool are taxable. How the tax actually gets paid depends on the construction contract type:

• Lump-sum contract: the contractor owes tax on the cost of all materials incorporated into the pool; no tax is separately collected from the customer on any part of the lump-sum bill.
• Separated contract: the contractor buys materials tax-free with a resale certificate, then collects tax from the customer on the materials portion of the bill only — not on the labor portion.

What this means for you

Patients seeking a physician-prescribed pool for therapy

Unlike a prescribed spa (which can qualify for the health care supplies/therapeutic device exemption under Rule 3.284(c)(8)), an in-ground swimming pool will not qualify for a sales tax exemption no matter how medically necessary — because it's a permanent real property improvement, and no health-care exemption reaches those. Budget for sales tax on the pool's materials regardless of your prescription.

Pool contractors and builders

Whether you or your customer effectively bears the sales tax cost on materials depends entirely on how you structure the contract — lump-sum (you pay tax on your material costs, no separate tax line to the customer) versus separated (you buy materials tax-free for resale, then collect tax from the customer on the materials line, but not on labor).

Accountants and tax professionals

A useful contrast case: the spa exemption under Rule 3.284(c)(8) is narrow and doesn't extend to permanent real property improvements like an in-ground pool, even where the fact pattern (physician's prescription, therapeutic necessity) closely tracks what would qualify a spa. The health care supplies exemption in § 151.313 simply has no permanent-improvement carve-out.

Common questions

Q: Can I avoid sales tax on an in-ground pool if my doctor prescribes it for physical therapy?
A: No. The therapeutic-device exemption applies to spas under Rule 3.284(c)(8), not to permanent real property improvements like an in-ground pool.

Q: Why does a spa get an exemption but not a pool?
A: Rule 3.284(c)(8) specifically covers spas as therapeutic devices. An in-ground pool is a permanent improvement to realty, and no provision in § 151.313 or Rule 3.284 exempts permanent real property improvements.

Q: Who pays the sales tax on the pool materials — me or the contractor?
A: It depends on your contract. Under a lump-sum contract, the contractor pays tax on material costs and doesn't add a separate tax charge to your bill. Under a separated contract, the contractor buys materials tax-free and then collects tax from you on the materials portion (but not on labor).

Q: Can I rely on this letter for my own situation?
A: No. This opinion is based on the facts submitted, and other facts, though similar, may result in different answers.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.313 (Health Care Supplies)
• 34 Tex. Admin. Code Rule 3.284(c)(8) (therapeutic devices — spa exemption)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200004228L

Original ruling text

Date: April 21, 2000

From: Bettie Peterson

To:

Subject: Sales tax on swimming pool for medical reasons

Thank you for your recent email.

The exemption for spas is covered under Rule 3.284(c)(8) which is for
therapeutic devices. An inground swimming pool is a permanent improvement to
realty. Texas Tax Code Section 151.313, Health Care Supplies nor the Rule
contain a provision to exempt a permanent improvement to realty.

The materials used to build a swimming pool at your residence are taxable. How
the tax is paid or collected is determined by the type of contract, i.e.,
lump-sum or separated.

Under a lump-sum contract, the contractor owes tax on his cost of all
incorporated materials. Tax will not be collected from the customer on any
portion of the lump-sum bill.

Under a separated contract, the contractor issues vendors a resale certificate
in lieu of tax on the incorporated materials and then collects tax from his
customer on the materials portion of the bill. Tax is not collected on the
labor portion of the bill.

Referenced rules are available at
.

The State Tax Automated Research system, which provides viewing and downloading
of rules, edited letter rulings, hearings, AG Opinions, etc., may be accessed
on the Internet at: http://www.window.state.tx.us/

This opinion is based on the facts you submitted and current law. Other facts
though similar, may result in different answers.

If you have questions or need more information, I will be glad to help you. You
may call me toll free from anywhere in the United States at 1-800-531-5441,
extension 5-0330

On Fri, 14 Apr 2000 19:35:28 -0500 ** wrote:

I have severe back problems and need physical therapy in a swimming pool. The
exercises that I do can not be done in a spa. The pool must be deep enough so
that I can put a flotation device under my arms and tread water. My doctor
gave me a prescription so I would not be required to pay sales tax. One company
that I went to said the exemption is only for spas. I would appreciate your
assistance in the matter.

My E-mail address is .

Sincerely, **