Apartment Buildings & Property Management
The Arvada Municipal Code imposes a sales tax on the price paid for items sold at retail in the City of Arvada (COA). If sales/use tax was not paid to the COA or another municipality, Arvada uses tax is due. The taxable price is the amount of money received or due, including shipping charges.
Owners and managers of rentals in the City must get a Business License and pay Arvada sales tax on items used for their properties. If Arvada sales tax is not paid at the time of sale, then a use tax must be paid to the City. Sales or use taxes paid to other municipalities will be credited toward Arvada taxes. Such credit may not exceed the Arvada use tax due.
Materials used in minor repair work (not requiring a building permit) are subject to sales and use tax. Labor, if billed separately, is not subject to sales and use tax. Property like finished units, appliances, water heaters, carpets, etc., are subject to sales and use tax.
Buying an Existing Apartment Complex
When a business purchases an existing apartment complex, tax is due on everything included in the transaction. This is true even when the sale is a lump-sum transaction. The amount taxed is the price recorded in the bill of sale or agreement, as long as the price is greater than or equal to the fair market value at the time of sale. The City uses the best information available to find the tax due on properties like appliances, furniture, and window coverings. Sometimes, past taxes or an independent appraisal is required.
Rent payments or charges are not subject to City sales or accommodations tax if the contract is for a period of at least 30 consecutive days. City sales tax applies to personal property like vending machine sales, and furniture or equipment rental.
- Apartment Complex A buys new washers and dryers for the laundry room from an online retailer. The units arrive at the Arvada Apartment Complex. An Arvada plumber removes the old units and installs the new units. The Complex pays $5,800 for the units plus freight of $300. The plumber charges $500 for labor and $85 plus tax for miscellaneous hoses, clamps, and PVC extensions.
The online retailer did not charge any sales tax for the new washer and dryer units. Use tax is due from the Complex to the City on both the $5,800 sale price and the $300 freight charges. The plumber billed parts and labor separately and charged City sales tax on the parts he used. There is no tax due on the amount paid to the plumber.
- Property Management Company C owns and leases several commercial office buildings in Arvada. In the lobby of one of their buildings, the Company has placed a soda vending machine and a candy vending machine, which they own. Anyone who works in or visits the building can buy soda or candy. City sales tax (which is included in the sale price of the soda and candy) is due from Company C in this case.
- The Breezy Apartment complex was recently sold to a new owner. The complex consisted of 70 apartments and sold for $800,000. The sales contract did not list any separate charges for personal property. Appliances (refrigerators, microwaves, and more) were present in each apartment unit. There were also washers and dryers in the on-site laundry room, furniture and games in the clubhouse, and office equipment in the main office. Those items are all subject to use tax, even though they were not listed on the sales contract.
Note: This information is a summary in layman's terms of the relevant Arvada tax law for this subject, industry, or business segment. It is not intended for legal purposes to be substituted for the full text of the Arvada tax code. However, the tax guide shall be used in conjunction with the Arvada tax code (chapter 98) in determining tax liability.