Contractors should pay sales tax to vendors such as Menards and Home Depot for parts and materials for remodeling projects on real property generally.
Quick terms tip on the difference between REAL PROPERTY AND PERSONAL PROPERTY (different jurisdictions have different criteria, including based on context as you will see in the following, and may change, so as with everything on the site, use the following definitions as a guide, not as absolute):
Real property is considered the ground that we stand on, and most improvements to the ground. A typical improvement is a structure, and a structure is a building or dwelling, commonly called a building, house, shed, barn, and the things that are permanently attached to structures.
Personal property (sometimes referred to as tangible property, or chattel) are "things" (that you can touch, move, and see) that aren't Real Property.
Personal property can become real property and real property can become personal property. For example, a contractor buys a window from a vendor, and it's considered personal property. At the moment the window is permanently attached to the structure, it changes status from personal property to real property. If the window is replacing an old window, the old window's status changes from real property to personal property once it's removed from the structure. The same is true with carpet, sinks, light fixtures, and crops. For example, something that is growing in the ground is real property, for example a tree, albeit once it's cut down, it becomes personal property).
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If you're a contractor wondering if you should get a reseller's permit (or maybe you already have one), with the thought that since you're "reselling" the building materials when a homeowner or commercial building owner "buys" the product as part of your services, the answer is generally no. There is a difference if you're selling the parts (as purchased from a vendor), and you're in the business of reselling parts and/or building material without installing said parts.
If you're not a contractor that is also a retailer, than you pay the sales tax when you buy building materials, and then invoice your client for the remodeling / installation work, and don't charge sales tax (generally).
According to the State of Wisconsin, here are some examples of when a contractor is acting as a retailer and shouldn't pay sales tax on the material, however, should charge sales tax to the purchaser / client…
1. Selling lumber, roofing materials, or other tangible personal property, without installation.
2. Repairing, servicing, altering, fitting, cleaning, painting, coating, towing, inspecting, and maintaining tangible personal property.
3. Repairing, servicing, altering, fitting, cleaning, painting, coating, towing, inspecting, and maintaining property that is considered to retain its character as tangible personal property after installation, regardless of the extent to which any such item is fastened to, connected with, or built into real property, and regardless of whether such property is considered to be real property for other purposes.
Number three can be confusing to say the least. Especially the part where property is considered real property in other contexts, and yet is considered more or less to be personal property for sales tax purposes. Unless you have a list, there's no real way of knowing what is what because it's all so very subjective. So, I'm including a list from Wisconsin, albeit it's subject to change and may or may not have any relevance for Minnesota or any other state.
4. Ovens, including associated hoods and exhaust systems.