Real Property

Sections 55-308, 63-3609, 63-3612, 63-3616, Idaho Code 01. Real Property. The term real property means land and improvements or fixtures to the land. (7-1-26) 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 can’t 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. (7-1-26) 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. Adaptation or application of the article to the use or purpose to which that part of the realty is suitable. (7-1-26) c. Intention to make the article a permanent addition to the realty. (3-31-22) i. Intention is determined from the surrounding circumstances at the time of installation. It isn’t the undisclosed purpose of the annexor, but rather the intention implied and manifested by their act. (7-1-26) 04. Trade Fixtures. A trade fixture is an item affixed to a building which a business uses for the purpose of trade, manufacture, ornament, or domestic use. A trade fixture is tangible personal property which is easily removed without causing significant damage to the fixture or premises. “Trade fixtures” include display cases, trophy cases, clothing racks, shelving, modular displays, kiosks, wall cases, register stands, and check-out counters. If trade 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 trade fixture will only be deemed to be a real property improvement if: (7-1-26) 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) 05. Examples. Available at Sales and Use Tax Examples. (7-1-26)