Can a Manhattan co-op buy garage spaces at nearby third-party garages and resell the garaging rights to its own tenant-shareholders tax-free, either through the resale certificate or the homeowner's-association parking exclusion?

Plain-English summary

A Manhattan cooperative housing corporation doesn't have its own garage. Many of its tenant-shareholders park at nearby public multi-car garages, dealing directly with those garage operators. The co-op proposed a change: it would buy garaging rights in bulk from those third-party garage operators and resell those rights only to the tenant-shareholders who wanted to buy in, who would then deal exclusively with the co-op rather than the garage directly. It asked two questions — whether its resale charges to tenant-shareholders would be taxable, and whether it qualifies as a "homeowner's association" under the Tax Law's special parking-tax exclusion.

New York taxes charges for parking, garaging, and storing motor vehicles broadly, and anyone who charges for parking (even without operating the garage itself) counts as a "vendor" required to collect that tax — so simply not owning the garage doesn't get the co-op out of collecting tax on its resale to tenant-shareholders. On the purchase side, though, since the co-op is buying the garaging rights exclusively to resell them, its own purchases from the garage operators qualify for the ordinary resale exclusion, so it can buy them tax-free with a properly completed resale certificate.

The bigger question was the special homeowner's-association exclusion, which lets a cooperative housing corporation's own garage revenue go untaxed when charged to its own members. The co-op does qualify as a "homeowner's association" in the general sense — its members are exclusively residential shareholders. But the exclusion has a second, independent requirement: the garage or parking facility has to be located within the association's own defined geographical area (the building/development itself), not just somewhere nearby. Since these garages belong to unrelated third parties in the "immediate vicinity" — not part of the co-op's own premises — the Department held that condition isn't met, so the exclusion doesn't apply. The co-op must charge State and City sales tax when it resells the garaging rights to its tenant-shareholders. One narrower silver lining: tenant-shareholders who actually live in Manhattan may still separately qualify for the City's own Manhattan-resident parking-tax exemption on the extra 8% surtax (a different, city-specific rule, not the homeowner's-association exclusion).

What this means for you

Cooperative and condominium boards arranging off-site parking for residents

Buying garage spots wholesale and reselling them to your own shareholders/unit owners doesn't automatically get the homeowner's-association parking exemption — that exemption is narrowly tied to a garage located within your building's or development's own defined area. If the garage belongs to an unrelated third party nearby, expect to collect sales tax (state, and NYC tax if applicable) on your resale, even while you can buy the underlying rights tax-free using a resale certificate.

Property managers structuring bulk garage-space purchases

The "buy tax-free with a resale certificate, then collect tax on resale" split is the normal two-step pattern any reseller of parking follows — it applies regardless of whether the ultimate buyer is a homeowner's association member or not, since the resale exclusion and the HOA exemption are two entirely separate legal questions.

Accountants and tax professionals

The key statutory hook is the second prong of the homeowner's-association definition in Tax Law § 1105(c)(6): the association must "own or operate" the garage/parking facility "located in such area." Simply reselling third-party garage rights doesn't satisfy either "own or operate" or "located in such area." Also worth flagging the Manhattan-resident carve-out under § 1212-A(a)(1), which is independent of the HOA exclusion and can still shave off the City's extra 8% surtax for individual Manhattan residents even when the state/city base parking tax still applies.

Common questions

Q: Does a cooperative housing corporation ever get an exemption on parking charges to its own shareholders?
A: Yes, but only if the co-op itself owns or operates the garage or parking facility, and that facility is located within the co-op's own defined residential area — a nearby but unrelated third-party garage doesn't qualify.

Q: Can the co-op buy the garage spaces from the third-party operator without paying sales tax?
A: Yes. Since the co-op is purchasing the garaging rights exclusively to resell them to its tenant-shareholders, it can give the garage operator a properly completed resale certificate and avoid paying tax on that purchase.

Q: If the co-op qualifies as a "homeowner's association" generally, why doesn't the exemption apply here?
A: Qualifying as a homeowner's association is only half the test. The exemption also requires that the parking facility itself sit within the association's own defined geographical area — which these third-party garages, located elsewhere in the neighborhood, do not.

Q: Do Manhattan residents get any separate break on this parking charge?
A: Possibly, on the extra 8% Manhattan parking surtax specifically — tenant-shareholders whose primary residence is in Manhattan may separately qualify for that particular local exemption, independent of the homeowner's-association question.

Citations and references

Statutes and regulations:

• Tax Law § 1105(c)(6) (tax on parking, garaging, or storing motor vehicles; homeowner's association exclusion)
• Tax Law § 1107 (additional NYC sales tax; parking services carve-out)
• Tax Law § 1109(a) (metropolitan commuter transportation district additional tax)
• Tax Law § 1212-A(a) (local law authorizing NYC additional parking tax; Manhattan resident exemption)
• New York City Administrative Code § 11-2049 (NYC parking tax; homeowner's association exclusion)
• 20 NYCRR § 526.6(c)(1) (resale exclusion)
• TSB-M-91(7)S (State and Local Sales Tax Imposed on Parking Fees)
• TSB-M-98(8)S (Expanded Exclusion for Parking Charges Paid to Homeowners' Associations)
• TSB-M-96(13)S (NYC Parking Tax Exemption for Manhattan Residents)

Prior rulings referenced:

• DiMarco, Abiusi, Pascarella, & Firnstein, CPA's, Adv Op Comm T&F, Feb. 11, 1991, TSB-A-91(18)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2000.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a00_40s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-00(40)S
Sales Tax
October 12, 2000

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S000110A

On January 10, 2000, the Department of Taxation and Finance received a Petition for
Advisory Opinion from 25 East 86th Street Corporation, c/o Orsid Realty Corp., 156 West 56th Street,
New York, NY 10019.
The issues raised by Petitioner, 25 East 86th Street Corporation, are:
(1) Whether charges by Petitioner, a cooperative housing corporation, to its tenant­
shareholders for garaging rights it has purchased from a third party garage operator constitute
receipts subject to tax under Section 1105(c)(6) of the Tax Law.
(2) Whether Petitioner qualifies as a “homeowner’s association” within the meaning of
Section 1105(c)(6) of the Tax Law.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner is a cooperative housing corporation as defined in §216(b)(1) of the Internal
Revenue Code (“IRC”). Petitioner owns and operates an apartment house in Manhattan (“the
Building”). Every one of its tenant-shareholders owns and/or resides in a residential dwelling unit
in the Building. The Building does not contain a garage, and Petitioner does not otherwise own a
garage. Many of Petitioner’s tenant-shareholders garage their personal automobiles in multi-car
garages located in the immediate vicinity of the Building that are open to the public. Those tenant­
shareholders deal directly with the operators of those garages (“Operators”).
It is proposed that Petitioner will purchase from Operators a number of garaging rights and
resell those garaging rights to such of its tenant-shareholders who wish to purchase them for the
purpose of garaging their personal automobiles (“the Participating Members”). Each Participating
Member will deal only with Petitioner and not with any Operator. Petitioner will pay the Operators
for every garaging right purchased by it, whether or not it resells such garaging right and whether or
not the Participating Member pays it for such garaging right. Petitioner owns no motor vehicles and
will not itself make use of any garaging right that it purchases.
Applicable Authority
Section 1105(c) of the Tax Law imposes sales tax upon receipts from the sales, except sales
for resale, of certain enumerated services, including:

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(6) Providing parking, garaging or storing for motor vehicles by persons
operating a garage (other than a garage which is part of premises occupied solely as
a private one or two family dwelling), parking lot or other place of business engaged
in providing parking, garaging or storing for motor vehicles. . . . Provided, however,
receipts for such services paid to a homeowner’s association by its members shall not
be subject to the tax imposed by this paragraph. For purposes of this paragraph, a
homeowner’s association is an association (including a cooperative housing or
apartment corporation) (i) the membership of which is comprised exclusively of
owners or residents of residential dwelling units, including owners of units in a
condominium, and including shareholders in a cooperative housing or apartment
corporation, where such units are located in a defined geographical area such as a
housing development or subdivision and (ii) which owns or operates a garage,
parking lot or other place of business engaged in providing parking, garaging or
storing for motor vehicles located in such area for use (whether or not exclusive) by
such owners or residents.
Section 1107 of the Tax Law provides, in part:
(a) General. On the first day of the first month following the month in which
a municipal assistance corporation is created under article ten of the public
authorities law for a city of one million or more, in addition to the taxes imposed by
sections eleven hundred five and eleven hundred ten, there is hereby imposed on such
date, within the territorial limits of such city, and there shall be paid, additional taxes,
at the rate of four percent, which except as provided in subdivisions (b) and (d) of
this section, shall be identical to the taxes imposed by sections eleven hundred five
and eleven hundred ten. . . .
(b)(8) The tax imposed by subdivision (a) of this section shall not be imposed
on . . . receipts from the services described in paragraph six or seven of subdivision
(c) of section eleven hundred five. . . .
(c) Tax on sale of service of parking, garaging or storing of motor vehicles.
On the first day of the first month following the month in which a municipal
assistance corporation is created under article ten of the public authorities law for a
city of one million or more, in addition to the taxes imposed by sections eleven
hundred five, eleven hundred ten and subdivision (a) of this section, there is hereby
imposed on such date, within the territorial limits of such city, and there shall be
paid, additional taxes at the rate of six percent on receipts from every sale of the
service of providing parking, garaging or storing for motor vehicles by persons
operating a garage (other than a garage which is part of premises occupied solely as
a private one or two family dwelling), parking lot or other place of business engaged

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in providing parking, garaging or storing of motor vehicles . . . provided, however,
that receipts for such services paid to a homeowner’s association by its members
shall not be subject to the tax imposed by this subdivision. For purposes of this
subdivision, a homeowner’s association is an association (including a cooperative
housing or apartment corporation) (i) the membership of which is comprised
exclusively of owners or residents of residential dwelling units, including owners of
units in a condominium, and including shareholders in a cooperative housing or
apartment corporation, where such units are located in a defined geographical area
such as a housing development or subdivision; and (ii) which owns or operates a
garage, parking lot or other place of business engaged in providing parking, garaging
or storing for motor vehicles located in such area for use (whether or not exclusive)
by such owners or residents. . . .
Section 1109(a) of the Tax Law provides, in part:
General. In addition to the taxes imposed by sections eleven hundred five and
eleven hundred ten of this article, there is hereby imposed within the territorial limits
of the metropolitan commuter transportation district created and established pursuant
to section twelve hundred sixty-two of the public authorities law, and there shall be
paid, additional taxes, at the rate of one-quarter of one percent, which shall be
identical to the taxes imposed by sections eleven hundred five and eleven hundred
ten of this article. . . .
Section 1212-A(a) of the Tax Law provides, in part:
Any city in this state having a population of one million or more . . . is hereby
authorized and empowered to adopt and amend local laws imposing in any such city:
(1) a tax on receipts from every sale of the service of providing parking, garaging or
storing for motor vehicles by persons operating a garage (other than a garage which
is part of premises occupied solely as a private one or two family dwelling), parking
lot or other place of business engaged in providing parking, garaging or storing for
motor vehicles, in any county within such city with a population density in excess of
fifty thousand persons per square mile, at the rate of eight per centum, on receipts
from every sale of such services, except receipts from the sale of such services to an
individual resident of such county when such services are rendered on a monthly or
longer-term basis at the principal location for the parking, garaging or storing of a
motor vehicle owned or leased (but only in the case of a lease for a term of one year
or more) by such individual resident. . . .
Section 11-2049 of the New York City Administrative Code provides, in part:

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. . .there is hereby imposed within the city of New York, and there shall be
paid, a tax at the rate of eight percent on receipts from every sale of the service of
providing parking, garaging or storing for motor vehicles by persons operating a
garage (other than a garage which is part of premises occupied solely as a private one
or two family dwelling), parking lot or other place of business engaged in providing
parking, garaging or storing for motor vehicles, in every county within the city of
New York with a population density in excess of fifty thousand persons per square
mile, as determined by reference to the latest federal census; provided, however, that
receipts for such services paid to a homeowner’s association by its members shall not
be subject to the tax imposed by this section. For purposes of this section, a
homeowner’s association is an association (including a cooperative housing or
apartment corporation) (i) the membership of which is comprised exclusively of
owners or residents of residential dwelling units, including owners of units in a
condominium, and including shareholders in a cooperative housing or apartment
corporation, where such units are located in a defined geographical area such as a
housing development or subdivision; and (ii) which owns or operates a garage,
parking lot or other place of business engaged in providing parking, garaging or
storing for motor vehicles located in such area for use (whether or not exclusive) by
such owners or residents. The tax imposed on the receipts described in this section
is in addition to the tax imposed on such receipts under subchapter one of this chapter
or section eleven hundred seven of the tax law, as the case may be.
Section 526.6(c)(1) of the Sales and Use Tax Regulations states, in part:
Where a person, in the course of his business operations, purchases tangible
personal property or services which he intends to sell, either in the form in which
purchased, or as a component part of other property or services, the property or
services which he has purchased will be considered as purchased for resale, and
therefore not subject to tax until he has transferred the property to his customer.
Technical Services Bureau Memorandum TSB-M-91(7)S, dated March 1, 1991, entitled State
and Local Sales Tax Imposed on Parking Fees June 1, 1990, provides, in part:
The services of parking, garaging and storing motor vehicles are taxable when
provided by an owner or operator of a parking lot, parking garage (except as
otherwise excluded) or any other place engaged in providing parking, garaging or the
storage of motor vehicles. . . .
*

*

*

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The tax imposed on parking, garaging and storing is a broadbased tax that
affects nearly any individual, organization, business or governmental entity that
makes a charge for the privilege of parking, or garaging or storing a motor vehicle.
Anyone making a charge for parking is a “vendor” under the Sales Tax Law. . . .
(Emphasis added)
*

*

*

The lease of a parking lot or portion of a parking lot for the purpose of
parking is subject to the tax on parking.
Example (6) A business tenant in a commercial building leases 50 parking
spaces of the building parking lot from the landlord. The business tenant allows its
employees to park in these spaces free of charge. The business tenant is purchasing
parking from the landlord. The landlord is required to collect sales tax from the
business tenant on the lease charge attributable to the parking spaces.
The lease of real property (including a parking lot) for other than the purpose
of parking is not subject to sales tax.
*

*

*

The resale certificate may only be used by a vendor who is buying parking,
garaging, or storage services or spaces exclusively for the purpose of reselling those
services or spaces to another party or parties. The vendor who furnishes a properly
completed resale certificate will not be required to pay sales tax on the purchase of
these services, but is required to collect sales tax on such services when they are
resold. The resale certificate may not be used to purchase parking if any portion
thereof is not resold.
Example (8) A business tenant in a commercial building leases 50 parking
spaces in the building’s parking lot from the landlord so that it may provide parking
for its employees. In turn, the business tenant will sell monthly permits to its
employees. The building landlord will not be required to collect sales tax from the
business tenant if the tenant provides the landlord with a properly completed resale
certificate. The tenant is required to collect sales tax on its sale of parking permits
to its employees. If, however, the business tenant intends to resell only 45 of the
parking spaces and use the other 5 spaces for its executives, the business tenant may
not use a resale certificate to purchase all 50 spaces for resale, it must make a
separate purchase of the 5 spaces it does not intend to resell and pay the appropriate
tax on the charge for those 5 spaces.

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Technical Services Bureau Memorandum TSB-M-98(8)S, dated September 1, 1998, entitled
Expanded Exclusion for Parking Charges Paid to Homeowners’ Associations by their Members,
provides that the following conditions must be met in order for a homeowner’s association to be
eligible for the sales tax exclusion for parking charges:
•

The homeowners’ association must own or operate the garage, parking lot, or other
parking facility (whether or not it is operated exclusively for its members).

•

The homeowners’ association must be an association whose membership is
comprised exclusively of owners or residents of residential dwelling units (such as
single-family homes, condominium units, or cooperative housing or apartments).

•

The dwelling units must be in a defined geographical area, such as a housing
development or subdivision, and the parking facility must be located within that
defined geographical area. Emphasis added

•

The parking charges must be paid to the homeowners’ association by its members.

Opinion
Petitioner is a cooperative housing corporation that owns and operates a residential apartment
house in Manhattan. Since the apartment house does not contain a garage, and Petitioner does not
otherwise own a garage, Petitioner is considering purchasing a number of garaging rights from the
operators of multi-car garages located in the immediate vicinity of its apartment house. Petitioner
plans to resell these rights to its tenant-shareholders who wish to purchase them, for charges imposed
by Petitioner, for the purpose of garaging their personal automobiles.
With respect to Issue (1), pursuant to Section 1105(c)(6) of the Tax Law, the receipts derived
from the providing of parking, garaging or storing of motor vehicles by persons operating a garage,
parking lot or other business engaged in providing parking, garaging or storing for motor vehicles,
except as otherwise excluded, are subject to sales tax. Parking consists of the act of providing
temporary storage for a motor vehicle, for a consideration, either directly or indirectly (see DiMarco,
Abiusi, Pascarella, &Firnstein, CPA’s, Adv Op Comm T&F, February 11, 1991, TSB-A-91(18)S).
Also, any person making a charge for parking, garaging or storing of motor vehicles, except as
otherwise excluded, is a vendor for the purpose of collecting sales tax (see TSB-M-91(7)S, supra).
Petitioner, although its activities do not include the actual operation of the garage, is engaged in
providing parking for motor vehicles and is required, unless otherwise excluded, to collect sales tax
on such services when they are resold to its tenant-shareholders (see DiMarco, Abiusi, Pascarella,
&Firnstein, CPA’s, supra; TSB-M-91(7)S, supra). The garage operators will be considered to be
making sales of parking services to Petitioner since they will continue to maintain and operate the
parking facilities as part of the transactions (see DiMarco, Abiusi, Pascarella, &Firnstein, CPA’s,

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supra). However, such sales will come within the resale exclusion contained in Section 526.6(c)
of the Sales and Use Tax Regulations, if Petitioner is buying the parking services exclusively for the
purpose of reselling them to another party or parties. Petitioner, upon furnishing a garage operator
with a properly completed resale certificate, will not be required to pay sales tax on its purchase of
the parking services.
Concerning Issue (2), parking charges paid to a homeowner’s association, which includes a
cooperative housing corporation, by its members are excluded from all sales taxes, including the
parking taxes imposed in New York City. See Sections 1105(c)(6), 1107(c), 1109(a) and Section
11-2049 of the Administrative Code of the City of New York. Central to Petitioner’s inquiry is the
statutory requirement that in order for a homeowner’s association to be eligible for this exclusion,
the residential dwelling units of the association must be located in a defined geographical area such
as a housing development or subdivision, and the parking/garaging for motor vehicles must be
located in such area. In this case, where the garages are located on the premises of third parties in
the “immediate vicinity” of Petitioner’s apartment building, the question arises whether this
condition will be met.
The Legislative Memorandum in Support for Chapter 389 of the Laws of 1997, which added
the homeowner’s association exclusion for parking receipts contained Section 1105(c)(6) of the Tax
Law, indicates that the purpose of this provision is to exempt receipts from parking/garaging in
condominium and cooperative housing units (1997 McKinney’s Session Laws of New York, 2381).
The Legislative Memorandum in Support for Chapter 344 of the Laws of 1998, which extended the
homeowner’s association exclusion to New York City parking taxes, stated that the homeowner’s
exclusion was intended to address an inequity where, prior to the amendment of Section 1105(c)(6),
homeowners were exempt from the payment of sales tax on their own garages, whereas residents of
co-ops were required to pay tax for parking their vehicles in their own buildings (1998 McKinney’s
Session Laws of New York, 1772-1773).
Section 1105(c)(6) of the Tax Law provides that in order for the homeowner’s association
exclusion to apply, the parking facility must be located within the homeowner’s association’s defined
geographical area. See TSB-M-98(8)S, supra. Although the term “defined geographical area” is not
defined in the Tax Law, the reference in Section 1105(c)(6) to "a defined geographical area such as
a housing development or subdivision" indicates that such term refers to the defined boundaries of
the homeowner’s association where its members reside. There is nothing in the legislative history
which supports a conclusion that third party garages in the immediate vicinity of Petitioner’s
apartment building would qualify. The parking facilities in this case are not part of the premises
occupied by Petitioner’s tenant-shareholders. Accordingly, Petitioner’s charges for garaging rights
to its tenant-shareholders are not excluded under the homeowner’s association provisions in the Tax
Law from the State and New York City sales taxes on parking. However, if the tenant-shareholder’s
primary residence is in Manhattan, the parking receipts may be exempt pursuant to Section
1212-A(a)(1) of the Tax Law from the 8% Manhattan additional parking tax. See Technical Services

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Bureau Memorandum, Change in the New York City Parking Tax Exemption for Manhattan
Residents, November 7, 1996, TSB-M-96(13)S for additional information on the exemption from
the 8% Manhattan parking tax for Manhattan residents.

DATED: October 12, 2000

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist III
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.