Texas Tax Code § 151.311. Taxable Items Incorporated Into or Used for Improvement of Realty of an Exempt Entity




(a) The purchase of tangible personal property for use in the performance of a contract for an improvement to realty for an organization exempted under Section 151.309 or 151.310 of this code is exempt if the tangible personal property is incorporated into realty in the performance of the contract.

(b) The purchase of tangible personal property, other than machinery or equipment and its accessories and repair and replacement parts, for use in the performance of a contract for an improvement to realty for an organization exempted under Section 151.309 or 151.310 of this code is exempt if the tangible personal property is:

(1) necessary and essential for the performance of the contract;  and

(2) completely consumed at the job site.

(c) The purchase of a taxable service for use in the performance of a contract for an improvement to realty that is performed for an organization exempted under Section 151.309 or 151.310 of this code is exempt if the service is performed at the job site and if:

(1) the contract expressly requires the specific service to be provided or purchased by the person performing the contract;  or

(2) the service is integral to the performance of the contract.

(d) For purposes of this section, tangible personal property is completely consumed if after being used once for its intended purpose it is used up or destroyed.  Tangible personal property that is rented or leased for use in the performance of the contract cannot be completely consumed for purposes of this section.


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