Sales Tax Articles
Sales Tax State Activity Update - April 2007
Some Stoves Solidified as Capital Improvements in New York
A recent advisory opinion issued by the New York Department of Taxation and Finance suggests the facts and circumstances of the installation of gas, wood and pellets stoves determines whether the installation qualifies as a capital improvement.
New York Sales and Use Tax Law defines the term capital improvement as an addition or alteration to real property which:
- (a)substantially adds to the value of the real property, or appreciably prolongs the useful life of the real property; and
- (b) 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
- (c) is intended to become a permanent installation. Charges for capital improvements are not subject to sales tax. Charges for maintaining, repairing or servicing real property are taxable services according to the law.
The Department indicates that the entire installation rather than the individual components must be looked at to determine whether an installation qualifies as a capital improvement.
The stove installation in question may include installing chimneys, attaching a liner to the stove and running it up an existing chimney, modifying existing construction, removing and enclosing an existing damper, and creating or enlarging an existing opening to connect the stovepipe with the chimney flue.
The Department also cites its own Publication 862 which determines capital improvements to include; the addition or complete replacement of a flue or liner (metal or foam) in a chimney, the original installation of wood burning stoves (including strengthening floors and fireproofing walls and floors) or the installation of a masonry or prefabricated chimney.
It is apparent given the facts and circumstances of the installation work and the Department's laws, regulations and publications that the installation of the wood stoves in question may qualify as nontaxable capital improvements.
The full text may be accessed on the New York State Department of Taxation and Finance website.
(New York Advisory Opinion TSB-A-07(1)S, February 8, 2007)
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