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BTLG Table of Contents > Sales and Use Tax Annotations > B > 150.0000 Buildings And Other Property Affixed To Realty > Annotation 150.0278

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150.0000 Buildings and Other Property Affixed to Realty—Regulation 1596

Annotation 150.0278

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150.0278 In-Place Sale of Machinery and Equipment. A manufacturing company who leases a building and owns pieces of machinery attached to the leased realty sold its assets. If, under the term of the lease, the lessee may not remove the machinery and equipment at the end of the lease term and must leave those items for the lessor such that the lessor effectively owns those items, the machinery and equipment would be regarded as real estate. However, the fact that the lease allows for removal of the machinery (upon repair of any damage to the real property caused by the installation or removal of the machinery or equipment) precludes any claim of conversion to realty by virtue of permanent attachment. Accordingly, the sale in place of machinery and equipment would be subject to tax. The classification of property in Regulation 1521 is to be used as a guide in determining whether the property is "machinery and equipment". 1/3/91. (Am. 2000–2).