# Tenn. Code Ann. § 67-6-204: Lease or rental of property > Tennessee · Statutes · In force URL: https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-204 ## Section - **Citation:** Tenn. Code Ann. § 67-6-204 - **Heading:** Lease or rental of property - **Jurisdiction:** Tennessee - **Kind:** Statutes - **Status:** In force - **Text as of:** August 14, 2026 - **Source:** Compiled text - **Location:** TN Code / Title 67 / Chapter 6 / Section 67-6-204 ## Text (a) It is declared to be the intention of this chapter to impose a tax on the sales price of all leases and rentals of tangible personal property and computer software in this state where the lease or rental is a part of the regularly established business, or the lease or rental is incidental or germane to the regularly established business. The tax is levied as follows: (1) At the rate of the tax levied on the sale of tangible personal property at retail by § 67-6-202 of the sales price derived from the lease or rental of tangible personal property, as defined herein, where the lease or rental of such property is an established business, or part of an established business, or the same is incidental or germane to the business; (2) At the rate of the tax levied on the sale of tangible personal property at retail by § 67-6-202 of the monthly lease or rental price by lessee or renter, or contracted or agreed to be paid by lessee or renter, to the owner of the tangible personal property. (b) (1) The lessee or renter of tangible personal property from a lessor that is a tax exempt entity may elect, in lieu of the tax imposed by this section on the monthly lease or rental price contracted or agreed to be paid by the lessee or renter to the tax exempt owner of the tangible personal property, to pay in a lump sum a use tax at the rate of the tax levied on the sale of tangible personal property at retail by § 67-6-202 of the purchase price to the lessor of the tangible personal property subject to the lease. (2) The election shall be made by the lessee in accordance with rules and regulations to be promulgated by the commissioner of revenue. An election may be revoked with the consent of the commissioner. The effect of payment by a lessee of a use tax based on the purchase price to the lessor of the tangible personal property, pursuant to an election made as provided in this section, shall be to relieve and discharge the lessee and its successors and assigns of any obligation of paying any tax on the monthly lease or rental price contracted or agreed to be paid by the lessee or its successors and assigns to the lessor with respect to the tangible personal property that is the subject of the lease during the term of the lease and any extensions and renewals thereof, and of any obligation to pay any sales or use tax with respect to the purchase by lessee from the lessor of the tangible personal property pursuant to a purchase option contained in the lease of the tangible personal property. (3) This subsection (b) also applies to permit a lump sum payment of a local option use tax under part 7 of this chapter, based upon the purchase price to the lessor, at the rate and subject to the limitation on the tax applicable in the particular municipality or county pursuant to § 67-6-702 . The lump sum payment is in lieu of any local option tax imposed under part 7 of this chapter on the monthly lease or rental of tangible personal property from a lessor that is a tax exempt entity. (c) Notwithstanding any other provision of law to the contrary, the one-half percent (0.5%) increase in the rate of the sales tax from five and one-half percent (5.5%) to six percent (6%) imposed by chapter 529 of the Public Acts of 1992 in this section and §§ 67-6-202 , 67-6-203 , 67-6-205 , and 67-6-221 shall remain in effect until changed by the general assembly. All revenue generated from such increases shall be deposited in the state general fund and earmarked for education purposes as provided in § 67-6-103(c)(2) . Acts 1947, ch. 3, §§ 3, 8; C. Supp. 1950, §§ 1248.52, 1248.64 (Williams, §§ 1328.24, 1328.30); Acts 1955, ch. 51, §§ 7, 8, 12; 1955, ch. 242, § 6; 1959, ch. 15, § 2; 1963, ch. 38, §§ 3, 5; 1963, ch. 172, § 3; 1965, ch. 335, § 2; 1971, ch. 78, § 1; 1971, ch. 117, § 2; 1972, ch. 653, § 1; 1973, ch. 239, § 1; 1974, ch. 675, § 1; 1975, ch. 316, § 1; 1976, ch. 466, §§ 1, 3; 1982, ch. 610, § 1; 1982, ch. 646, § 1; 1983, ch. 378, § 1; 1983, ch , §§ 1248.52, 1248.64 (Williams, §§ 1328.24, 1328.30); Acts 1955, ch. 51, §§ 7, 8, 12; 1955, ch. 242, § 6; 1959, ch. 15, § 2; 1963, ch. 38, §§ 3, 5; 1963, ch. 172, § 3; 1965, ch. 335, § 2; 1971, ch. 78, § 1; 1971, ch. 117, § 2; 1972, ch. 653, § 1; 1973, ch. 239, § 1; 1974, ch. 675, § 1; 1975, ch. 316, § 1; 1976, ch. 466, §§ 1, 3; 1982, ch. 610, § 1; 1982, ch. 646, § 1; 1983, ch. 378, § 1; 1983, ch. 402, § 1; T.C.A. (orig. ed.), §§ 67-3003(c), (d), 67-3024; Acts 1984 (Ex. Sess.), ch. 8, § 3; 1984, ch. 994, § 1; 1985, ch. 356, § 4; 1986, ch. 560, § 1; 1992, ch. 529, § 3; 1993, ch. 190, §§ 1, 2; 1996, ch. 664, § 1; 2002, ch. 856, § 4d; 2003 , ch. 357, §§ 4, 23; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2007 , ch. 602, §§ 51, 71-73; 2008 , ch. 1106, § 4. (a) It is declared to be the intention of this chapter to impose a tax on the sales price of all leases and rentals of tangible personal property and computer software in this state where the lease or rental is a part of the regularly established business, or the lease or rental is incidental or germane to the regularly established business. The tax is levied as follows: (1) At the rate of the tax levied on the sale of tangible personal property at retail by § 67-6-202 of the sales price derived from the lease or rental of tangible personal property, as defined herein, where the lease or rental of such property is an established business, or part of an established business, or the same is incidental or germane to the business; (2) At the rate of the tax levied on the sale of tangible personal property at retail by § 67-6-202 of the monthly lease or rental price by lessee or renter, or contracted or agreed to be paid by lessee or renter, to the owner of the tangible personal property. (1) At the rate of the tax levied on the sale of tangible personal property at retail by § 67-6-202 of the sales price derived from the lease or rental of tangible personal property, as defined herein, where the lease or rental of such property is an established business, or part of an established business, or the same is incidental or germane to the business; (2) At the rate of the tax levied on the sale of tangible personal property at retail by § 67-6-202 of the monthly lease or rental price by lessee or renter, or contracted or agreed to be paid by lessee or renter, to the owner of the tangible personal property. (b) (1) The lessee or renter of tangible personal property from a lessor that is a tax exempt entity may elect, in lieu of the tax imposed by this section on the monthly lease or rental price contracted or agreed to be paid by the lessee or renter to the tax exempt owner of the tangible personal property, to pay in a lump sum a use tax at the rate of the tax levied on the sale of tangible personal property at retail by § 67-6-202 of the purchase price to the lessor of the tangible personal property subject to the lease. (2) The election shall be made by the lessee in accordance with rules and regulations to be promulgated by the commissioner of revenue. An election may be revoked with the consent of the commissioner. The effect of payment by a lessee of a use tax based on the purchase price to the lessor of the tangible personal property, pursuant to an election made as provided in this section, shall be to relieve and discharge the lessee and its successors and assigns of any obligation of paying any tax on the monthly lease or rental price contracted or agreed to be paid by the lessee or its successors and assigns to the lessor with respect to the tangible personal property that is the subject of the lease during the term of the lease and any extensions and renewals thereof, and of any obligation to pay any sales or use tax with respect to the purchase by lessee from the lessor of the tangible personal property pursuant to a purchase option contained in the lease of the tangible personal property nd assigns to the lessor with respect to the tangible personal property that is the subject of the lease during the term of the lease and any extensions and renewals thereof, and of any obligation to pay any sales or use tax with respect to the purchase by lessee from the lessor of the tangible personal property pursuant to a purchase option contained in the lease of the tangible personal property. (3) This subsection (b) also applies to permit a lump sum payment of a local option use tax under part 7 of this chapter, based upon the purchase price to the lessor, at the rate and subject to the limitation on the tax applicable in the particular municipality or county pursuant to § 67-6-702 . The lump sum payment is in lieu of any local option tax imposed under part 7 of this chapter on the monthly lease or rental of tangible personal property from a lessor that is a tax exempt entity. (1) The lessee or renter of tangible personal property from a lessor that is a tax exempt entity may elect, in lieu of the tax imposed by this section on the monthly lease or rental price contracted or agreed to be paid by the lessee or renter to the tax exempt owner of the tangible personal property, to pay in a lump sum a use tax at the rate of the tax levied on the sale of tangible personal property at retail by § 67-6-202 of the purchase price to the lessor of the tangible personal property subject to the lease. (2) The election shall be made by the lessee in accordance with rules and regulations to be promulgated by the commissioner of revenue. An election may be revoked with the consent of the commissioner. The effect of payment by a lessee of a use tax based on the purchase price to the lessor of the tangible personal property, pursuant to an election made as provided in this section, shall be to relieve and discharge the lessee and its successors and assigns of any obligation of paying any tax on the monthly lease or rental price contracted or agreed to be paid by the lessee or its successors and assigns to the lessor with respect to the tangible personal property that is the subject of the lease during the term of the lease and any extensions and renewals thereof, and of any obligation to pay any sales or use tax with respect to the purchase by lessee from the lessor of the tangible personal property pursuant to a purchase option contained in the lease of the tangible personal property. (3) This subsection (b) also applies to permit a lump sum payment of a local option use tax under part 7 of this chapter, based upon the purchase price to the lessor, at the rate and subject to the limitation on the tax applicable in the particular municipality or county pursuant to § 67-6-702 . The lump sum payment is in lieu of any local option tax imposed under part 7 of this chapter on the monthly lease or rental of tangible personal property from a lessor that is a tax exempt entity. nder part 7 of this chapter, based upon the purchase price to the lessor, at the rate and subject to the limitation on the tax applicable in the particular municipality or county pursuant to § 67-6-702 . The lump sum payment is in lieu of any local option tax imposed under part 7 of this chapter on the monthly lease or rental of tangible personal property from a lessor that is a tax exempt entity. (c) Notwithstanding any other provision of law to the contrary, the one-half percent (0.5%) increase in the rate of the sales tax from five and one-half percent (5.5%) to six percent (6%) imposed by chapter 529 of the Public Acts of 1992 in this section and §§ 67-6-202 , 67-6-203 , 67-6-205 , and 67-6-221 shall remain in effect until changed by the general assembly. All revenue generated from such increases shall be deposited in the state general fund and earmarked for education purposes as provided in § 67-6-103(c)(2) . Acts 1947, ch. 3, §§ 3, 8; C. Supp. 1950, §§ 1248.52, 1248.64 (Williams, §§ 1328.24, 1328.30); Acts 1955, ch. 51, §§ 7, 8, 12; 1955, ch. 242, § 6; 1959, ch. 15, § 2; 1963, ch. 38, §§ 3, 5; 1963, ch. 172, § 3; 1965, ch. 335, § 2; 1971, ch. 78, § 1; 1971, ch. 117, § 2; 1972, ch. 653, § 1; 1973, ch. 239, § 1; 1974, ch. 675, § 1; 1975, ch. 316, § 1; 1976, ch. 466, §§ 1, 3; 1982, ch. 610, § 1; 1982, ch. 646, § 1; 1983, ch. 378, § 1; 1983, ch. 402, § 1; T.C.A. (orig. ed.), §§ 67-3003(c), (d), 67-3024; Acts 1984 (Ex. Sess.), ch. 8, § 3; 1984, ch. 994, § 1; 1985, ch. 356, § 4; 1986, ch. 560, § 1; 1992, ch. 529, § 3; 1993, ch. 190, §§ 1, 2; 1996, ch. 664, § 1; 2002, ch. 856, § 4d; 2003 , ch. 357, §§ 4, 23; 2004, ch. 959, § 68; 2005, ch. 311, § 1; 2007 , ch. 602, §§ 51, 71-73; 2008 , ch. 1106, § 4. ## Nearby sections - [Tenn. Code Ann. § 67-6-101 Short title - Nature of tax](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-101.md) - [Tenn. Code Ann. § 67-6-102 Chapter definitions - Definitions applicable for taxation of charges for mobile telecommunications services](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-102.md) - [Tenn. Code Ann. § 67-6-103 Deposit and allocation of receipts - Transportation equity trust fund - Other special allocations](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-103.md) - [Tenn. Code Ann. § 67-6-104 Apportionment of sales and use tax revenue to commercial development districts in rural, economically distressed counties](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-104.md) - [Tenn. Code Ann. § 67-6-105 Event Tourism Act](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-105.md) - [Tenn. Code Ann. § 67-6-106 Sales and use taxes collected on electronic nicotine delivery devices](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-106.md) - [Tenn. Code Ann. § 67-6-201 Taxable privilege declared](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-201.md) - [Tenn. Code Ann. § 67-6-202 Property sold at retail](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-202.md) - [Tenn. Code Ann. § 67-6-203 Property used, consumed, distributed or stored](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-203.md) - [Tenn. Code Ann. § 67-6-204 Lease or rental of property](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-204.md) - [Tenn. Code Ann. § 67-6-205 Services](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-205.md) - [Tenn. Code Ann. § 67-6-206 Industrial machinery and raw materials - Exemptions](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-206.md) - [Tenn. Code Ann. § 67-6-207 Property sold to farmer or nurseryman](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-207.md) - [Tenn. Code Ann. § 67-6-208 Warranty or service contract covering repair or maintenance of tangible personal property - Computer software maintenance contracts](https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-208.md) --- Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/STATE_TN_T67_C6_S67-6-204. Check the current official text before relying on it. Not legal advice.