A homebuilder is a contractor who improves residential real estate and who, in making such improvements, incorporates tangible personal property into the property improved.

Contracts

As a contractor, the homebuilder's sales and use tax responsibility depends upon the type of contract used. Contracts may be either lump-sum or separated contracts.

Lump-sum Contracts - A lump-sum contract is a contract through which the price is billed as one lump-sum amount. The contract does not state a separate charge for the skill and labor from the materials incorporated into the work nor does the contract require invoices or progress billings, etc., to separately state these charges.

Under a lump-sum contract, the homebuilder is considered the ultimate consumer