ECN Forum Forums General Topics of the Trade Business Related Discussion sales tax

Question
For what services to real property is a contractor required to charge New York State sales tax?

Answer
Services to real property are classified as either a capital improvement or a repair, maintenance or installation service. Installation services include the installation of tangible personal property which remains tangible personal property after its installation.

A capital improvement is an addition or alteration to real property that:

- substantially adds to the value of the real property, or appreciably prolongs the useful life of the real property
- becomes part of the real property or is permanently affixed to the real property so that removal would cause material damage to the property or article itself; and
- is intended to become a permanent installation.

If a contractor does a capital improvement for a customer and the customer provides the contractor with a properly completed Form ST-124, Certificate of Capital Improvement , no sales tax is required to be collected from the customer. On the other hand, when a contractor performs a job that constitutes a repair, maintenance, or installation service to real property, sales tax must be collected from the customer.

For further information pertaining to capital improvements and repairs to real property, please refer to Publication 862, Sales and Use Tax ...mprovements and Repairs to Real Property .