Pumping Iron Has Property Tax Implications


 

Gym

It’s a new year! Many of us will start it by focusing on new goals or tackling the ones we were unable to conquer in the past. One common goal on New Year’s resolution lists is more exercise. Naturally, the next step is to find a gym where you can pump iron or buy some fancy gym equipment for home use.

You might be surprised to know that depending on where you live, gym equipment is subject to property tax. Business owners are more likely to pay property taxes on this type of equipment. In Utah, for example, exercise and gym equipment is taxed as “class five" business personal property. Class five property includes items that become functionally obsolete due to changing styles. As such, its taxable value is calculated by applying a formula that takes the properties’ depreciating value into consideration. There are a few exemptions from the tax, however. 

Tangible personal property with a total aggregate fair market value of $10,300 (2016 rate) or less within a single county is tax exempt. In addition, expensed personal property with an acquisition cost of $1,000 or less and a “percent good“ (as an item of personal property ages, it’s percent good factor decreases) of 15 percent or less is also tax exempt.

Similarly, the District of Columbia, Georgia and Oregon impose personal property taxes on tangible personal property, like gym equipment, used or held for business purposes. But these states do not tax the same property if the purchaser gets it for home use and is not acquired for a commercial or business purpose. 

Virginia on the other hand, taxes tangible personal property more broadly, explicitly including household goods and personal effects among items that are subject to local property taxes. However, the governing body of any county, city or town may exempt certain specific household goods from tax, including sports equipment. That means the ThighMaster might be taxable in one Virginia county and exempt in another.

Texas and Washington also broadly tax tangible personal property, but both states exempt household goods and personal effects that are not for commercial use. It is also worth noting that in many states, gym equipment may be tax exempt if owned by charitable or non-profit organizations.

Although the taxes imposed on gym equipment will vary from one jurisdiction to the next, fitness centers and health clubs are more likely to be taxed on the purchase of gym equipment than individuals buying equipment for home use. On that note, should your 2017 resolutions include pumping iron, I wish you all the best of luck in achieving your goals.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Does your state or county impose tax on exercise equipment?

Get a free trial to Premier State Tax Library , a comprehensive research service that delivers deep, unique analysis and time-saving practice tools to help practitioners make well-informed decisions.