IDAPA 35.01.02.067 — REAL PROPERTY (RULE 067)

Sections 63-3609, 63-3612, 63-3616, Idaho Code
01.
Real Property. For the purpose of these rules, the term real property means land and improvements
or fixtures to the land.
(3-31-22)
02.
Improvements or Fixtures. Improvements or fixtures to real property include:
(3-31-22)
a.
Property which is physically attached to the land or other improvements affixed to the land in such
a manner that it may not be removed without materially damaging the real property or is of such a nature that it would
normally be expected to be sold together with the land.
(3-31-22)
b.
Property which increases the market value of the land or increases the ability of the possessor of the
land to use it more productively.
(3-31-22)
c.
Property which increases the market value or productivity on a relatively permanent basis.
(3-31-22)
03.
Three Factor Test. A three (3) factor test may be applied to determine whether an article has
become a fixture to real property. The three (3) tests to be applied are:
(3-31-22)
a.
Annexation to the realty, either actual or constructive.
(3-31-22)
b.
Adoption or application to the use or purpose to which that part of the realty to which it is
connected is suitable.
(3-31-22)
c.
Intention to make the article a permanent addition to the realty.
(3-31-22)
04.
Example 1: The original builder or owner of an apartment building installs draperies. The draperies
meet the three (3) factor test of a fixture to realty. First, they are constructively annexed to the realty when attached to
the drapery rod. Although the draperies are not affixed to the realty, they comprise a necessary, integral, or working
part of the object to which they are attached. Second, they appropriately adapt to the purpose of the realty to which
they are connected. Window coverings are necessary in order to maintain occupancy of the apartment. The third and
controlling factor in this example is the intention with which the installation was made. The intention is determined
from the surrounding circumstances at the time of installation. It is not the undisclosed purpose of the annexor, but
rather the intention implied and manifested by his act. The builders intended that the drapes would remain as long as
they served their purpose.
(3-31-22)
05.
Example 2: The three (3) factor test would not be met in Subsection 067.03 of this rule, if the
IDAHO ADMINISTRATIVE CODE
IDAPA 35.01.02
State Tax Commission
Idaho Sales & Use Tax Administrative Rules
Section 068
Page 62
drapes were installed by a tenant of an apartment leased for a term with no agreement as to ownership. The tenant
would be expected to remove or sell the drapes to an incoming tenant, and his intention would be the controlling
factor. The draperies would not be considered as fixtures to the real property.
(3-31-22)
06.
Personal Property Incidental to the Sale of Real Property. This rule does not affect the
provisions of Section 63-3609(b), Idaho Code.
(3-31-22)
07.
Store Fixtures. Store fixtures are items that are affixed to a building and used by retailers in the
conduct of their business. The term "store fixtures" includes display cases, trophy cases, clothing racks, shelving,
modular displays, kiosks, wall cases, register stands, and check-out counters. If store fixtures only benefit the
particular business occupying a building, they are not adapted to the use of the real estate and are therefore personal
property. A store fixture will only be deemed to be a real property improvement if:
(3-31-22)
a.
It is affixed to the real estate and its removal would cause significant structural damage to the
building itself; or
(3-31-22)
b.
It is affixed to the real estate and is of benefit to the land or building regardless of the particular
business conducted on the premises.
(3-31-22)
08.
Fiber Optic and Communication Cable. Fiber optic and communication cable installed in a
building is presumed to be a real property improvement.
(3-31-22)