March 17, 2017
The Tax on Home Repair under SB09
Bill Ward, Home Builders Association of Illinois
SB09 is the omnibus tax bill to raise new revenues for the state of Illinois. One tax that seems to be flying under the radar is a new “Use Tax” on home repair work which can be found in Amendment #3 to SB09, beginning on Page 213:
(2) Repair, servicing, alteration, fitting, cleaning, painting, coating, towing, inspection, or maintenance of tangible personal property that has been affixed to real estate; this paragraph (2) does not apply to new construction, reconstruction, or expansion of a building or structure.
Many who have read the amendment fail to grasp the impact of this section due to the vague manner in which it is written. Let’s just say, for all intents and purposes, this is a 6.25% Use Tax on Home Repairs.
This ambiguous terminology is borrowed language from the Wisconsin State Statutes. Within the Wisconsin Administrative Codes is a chart that identifies what is taxable under their terminology: “tangible personal property that has been affixed to real estate.”
If Illinois is to follow Wisconsin’s lead, here is what will be taxed starting January 1, 2018:
The Repair Work of:
- Central air conditioning.
- And installation of window air conditioners.
- Roof mounted antennas.
- Awnings.
- Bar equipment.
- Boilers.
- Installation of Buildings sold for Removal.
- Burglar Alarm fixtures.
- Cabinets in bathrooms.
- Carpeting.
- Coolers.
- Counters in bathrooms.
- Curtains.
- Dehumidifiers.
- Dishwashers.
- Drapes.
- Electric Clocks.
- Electric Dust Collectors.
- Electric Signs.
- Faucets in the bathroom.
- Fire Alarm fixtures.
- Furnaces.
- Furniture.
- Grills & Rotisseries.
- Home Theatre Systems.
- Television sets.
- Humidifiers.
- Incinerators.
- Intercoms.
- Jukeboxes.
- Laundry & Dry Cleaning machines.
- Manufactured homes on leased land.
- Manufactured homes on owned land not on a foundation.
- Ovens.
- Partitions & Movable walls.
- Piers.
- Portable Appliances.
- Portable Lamps.
- Pumps.
- Radios & TVs.
- Railroad Signs & Signals.
- Satellite Dishes.
- Shades.
- Sinks.
- Standing Timber for Removal.
- Stop & Go lights.
- Street Identification Signs.
- Sump Pumps.
- Swimming Pools.
- Tables.
- Temporary Electric Service.
- Transformers.
- Utility lines above ground within the right-of-way.
- Venetian Blinds.
- Washers.
- Water Heaters.
- Water Softeners.
This is Wisconsin’s list: what Illinois taxes will be left to the Governor, the Ill. Dept. of Revenue, and the Joint Committee on Administrative Rules.
If the Home Repair Tax is imposed, the National Association of Home Builders projects a decline in home repair work that would amount to at least $30 million and would lay off over 330 workers, statewide.
And let’s not forget, Illinois is dead last in new home production given a ratio of building permits to state population. The National Average for new home construction starts is close to 60% of normal construction rates; Illinois’ construction rate stands still at 25% of normal.
Illinois home construction market dropped by 85% after the economic collapse of 2008. We are nowhere close to being back on our feet, and now is not the time to tax homeowners for home repair work.
The solution is simple: delete language in SB09 that taxes “Tangible Personal Property Affixed to Real Estate” (Code Name: Home Repair Tax).
