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This article clarifies the tax treatment for home warranty sales.

The sale of an extended warranty for repairs of tangible personal property is defined in RCW 82.04.050(7) as a retail sale. For further information on sales of extended warranties covering tangible personal property, see our Special Notice “Extended Warranties Now Subject to Sales Tax” issued June 17, 2005.

The sale of an extended warranty that covers the repair of real property (“home warranty”), however, is not subject to sales tax. Instead, these warranty sales are subject to the service and other activities classification of the B&O tax.

For purposes of this article, home warranties cover real property, including but not limited to:

  • Air conditioning systems
  • Electrical systems
  • Furnace/heating systems
  • Plumbing/water systems
  • Structural building components
  • Built-in appliances, such as ovens.


Occasionally, home warranties are sold to cover certain specified items and for an additional charge, other items may be covered. If the additional charge is to cover tangible personal property, then retail sales tax will apply to the additional charge.

If the home warranty requires the owner to pay part of the cost of the repair, that charge is subject to retail sales tax. This is because repairs to buildings are retail sales. When a person other than the warrantor performs the repair for the warrantor, the person making the repair is making a retail sale and must collect retail sales tax on the charge to the warrantor.

When a covered repair is performed by the warrantor for no additional charge, the warrantor is the consumer of any parts and materials used in the repair. The warrantor must pay retail sales tax to the supplier, or use tax on the value of the parts and materials if the supplier did not charge sales tax.