I rent fully furnished condominium apartments in New York City on month-to-month-or-longer leases with a real landlord-tenant relationship, not hotel stays -- do I owe New York's hotel occupancy tax on the rent?

Plain-English summary

Battery Place Associates LLC owns furnished apartments within a luxury condominium building in New York City that also contains unfurnished rental apartments and owner-occupied condos, all mixed together on the same floors. Its furnished units — studios through two-bedrooms, fully equipped with kitchens, linens, and towels — are leased for terms of one month up to a year or longer (some tenants have stayed 11-12 years), to corporate clients on long-term assignments, people maintaining a New York residence, people needing temporary housing during renovation, and people who simply prefer furnished living. Occasional stays under a month happen, but only rarely, for guests of existing tenants or as a marketing tool. Tenants sign a standard landlord-tenant lease (security deposit, court-based eviction process, sublet consent, etc.), and the building has none of the classic hotel trappings: no restaurants, bars, room service, concierge, tour packages, front desk billing, or interior retail shops — just a doorman shared with the building's condo owners. Monthly rent bundles in utilities, cable, internet, and local phone; long-distance phone is billed and taxed separately. Tenants can pay extra for optional weekly maid service (linens changed, dishes loaded/unloaded) and for an off-site health club, both billed as add-ons.

Battery Place asked whether these furnished-apartment rentals count as "operating a hotel" for purposes of New York's hotel occupancy tax.

The Department held the base rent is not subject to hotel tax. New York's hotel definition covers a building "regularly used and kept open... for the lodging of guests," including apartment hotels — but the Department has long held (citing its own 1991 KPMG Peat Marwick opinion) that a landlord renting furnished apartments for one-month-or-longer terms, under a genuine landlord-tenant relationship (not transient lodging), is renting real property, not operating a hotel — even where tenants can subscribe to an optional light-cleaning/linen/laundry package. Because Battery Place's standard lease establishes a real landlord-tenant relationship, doesn't offer lodging to transients on a regular/daily basis, and lacks hotel-style amenities, it is "renting real property," not "operating a hotel," so the rent itself escapes the hotel occupancy tax. The opinion cautions this conclusion is entirely fact-dependent — it could flip if the building's operations change, or if units start renting for terms under one month.

But two add-on charges are taxable. The optional weekly maid service (changing linens, cleaning, dish duty) is a single bundled charge, and since it's billed as one lump sum combining a taxable real-property maintenance service with any exempt linen/laundry component, the whole charge is taxed — a separately-stated, reasonable linen/towel charge could have been excluded as laundering if it were priced and offered independently of the maid service, but bundling it into one charge pulls the whole thing into the taxable maintenance-service category. Separately, fees for the off-site health club (available to tenants and building residents alike for an annual fee) can be taxed as social/athletic club dues under a different Tax Law provision.

What this means for you

Furnished-apartment and extended-stay rental operators

Structuring your operation as genuine month-plus leases with a real landlord-tenant relationship — security deposits, court eviction procedures, no hotel amenities — keeps your base rent out of the hotel occupancy tax, even if you offer some housekeeping as an option. But don't bundle an optional linen/laundry charge into a single maid-service fee if you want any part of it to stay untaxed; keep laundering/linen charges separately priced and purchasable on their own if you want that portion excluded.

Buildings offering an on-site or affiliated health club

A health club membership or usage fee offered to tenants can be taxed separately as social/athletic club dues, independent of whatever result applies to the apartment rent itself.

Accountants and tax professionals

This is a durable application of the "genuine landlord-tenant relationship, no hotel amenities, minimum one-month term" test the Department first laid out in KPMG Peat Marwick (1991) — useful whenever a client operates furnished corporate housing, extended-stay units, or similar hybrid residential products and needs to know where the hotel-tax line falls.

Common questions

Q: Do I owe hotel occupancy tax on furnished apartments I rent for a month or longer under a real lease?
A: Generally no, as long as you have a genuine landlord-tenant relationship (security deposits, formal eviction process) and don't offer hotel-style amenities like food service, concierge, or front-desk billing.

Q: Is an optional weekly maid service with linens changed taxable?
A: Yes, if it's billed as a single bundled charge — the whole charge is then taxed as a real-property maintenance service, even though a genuinely separate, reasonably-priced linen/laundry charge could otherwise be excluded.

Q: Can I still be taxed on a health club fee even if my apartment rent isn't hotel-taxable?
A: Yes — health club membership/usage fees can be taxed separately as social or athletic club dues, regardless of how the apartment rent itself is treated.

Q: Does this ruling apply to my furnished-rental business?
A: Not automatically. This is an Advisory Opinion binding only on Battery Place Associates LLC and only as to the facts it described, and the Department explicitly notes the conclusion could change with different facts (e.g., shorter lease terms or added amenities). See also the same-day companion opinion, TSB-A-08(46)S, involving a similar operator (Milro Associates) at a different property, reaching the identical result.

Citations and references

Statutes and regulations:

• Tax Law §1101(c)(1) (definition of "hotel")
• Tax Law §1105(c)(5) (tax on maintaining/servicing real property)
• Tax Law §1105(e) (hotel room occupancy tax)
• Tax Law §1105(f)(2) (social/athletic club dues tax)
• Tax Law §1212-A(a)(2) (local tax on club dues)
• Sales and Use Tax Regulations §527.1(b) (bundled taxable/exempt charges taxed on total price)
• Sales and Use Tax Regulations §527.9 (hotel occupancy tax; definitions)

Prior opinions referenced:

• KPMG Peat Marwick, TSB-A-91(21)S (furnished apartment rentals not hotel occupancy)
• Linen Systems for Hospitals, Inc., TSB-A-81(14)S
• PricewaterhouseCoopers LLP, TSB-A-03(11)S
• Salomon & Leitgeb CPA's, LLP, TSB-A-97(44)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2008.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a08_45s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Taxpayer Guidance Division

TSB-A-08(45)S
Sales Tax
October 14, 2008

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S070326B

On March 26, 2007, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Battery Place Associates LLC, c/o Kaplan, 335 Madison Avenue, 15th
Fl., New York, New York 10017. Petitioner, Battery Place Associates LLC, provided additional
information pertaining to the Petition on May 4, 2007, and March 6, 2008.
The issue raised by Petitioner is whether rentals of furnished residential apartments as
described below are considered the operation of a hotel for purposes of the sales tax imposed
upon hotel occupancies.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner owns furnished apartments in a luxury condominium apartment building
complex (the Property) located in New York City. The Property includes a combination of
furnished and unfurnished apartments that are leased and owner-occupied condominium units.
Petitioner’s apartments are fully furnished and are leased by Petitioner for periods of at least one
month to a year or longer. A number of leases have been in place with the same tenants for 11
and 12 years. Tenants include corporate clients whose employees work in or near New York
City on long-term assignments, individual clients that maintain several residences throughout the
country or the world who wish to maintain a New York City residence, individual clients who
live in New York City but may be renovating an existing or new residence and require temporary
housing during construction, and individuals who simply prefer to lease a luxury furnished
apartment rather than lease an unfurnished apartment or own a condominium or cooperative
apartment.
On occasion, stays of less than one month are permitted, but, for the most part, only to
guests of existing tenants or as a marketing tool for purposes of recruiting new tenants. Aside
from those limited and infrequent exceptions, residents of furnished apartments sign a lease for a
minimum one-month period. In general, security deposits are required. In addition, Petitioner
complies with applicable landlord-tenant law in connection with all formal eviction proceedings,
and all dispute resolutions are handled via Landlord/Tenant Court.
Petitioner does not offer lodging to transients on a regular or daily basis. There are no
restaurants, bars, dinner clubs, food/room service, or minibars available to tenants. No tour
guides or other forms of entertainment packages are arranged on behalf of tenants; and there are
no postal facilities, newsstands, interior retail shops, or parking and retrieval of tenant cars as
would normally be found in a hotel. There are no ATMs or foreign currency exchange services
provided, no business centers, and no front desk where billing activities are carried on, payments
accepted, and bills adjusted.

-2TSB-A-08(45)S
Sales Tax
October 14, 2008

The furnished and unfurnished apartments that are leased and the owner-occupied
condominiums within the Property are not segregated. A combination of furnished and
unfurnished apartments, as well as owner-occupied condominiums, generally exists on all floors
throughout the Property. All units were built to be sold as residential apartments and the offering
plan is on file with the Attorney General’s office. Apartments were sold, and those that were not
sold, in part due to market conditions, were converted to furnished and unfurnished rental units.
The Property is similar to other luxury apartment complexes within the residential
community in which it is located. The apartments are built in the same manner and
configuration as are typically found in a New York City apartment. Furnished apartments range
in size from studios to one-bedroom and two-bedroom apartments, and include bathrooms, fully
equipped kitchens, and closet and storage space. Bed linens and towels are furnished. Washers
and dryers are located on each floor and are equally available for use by condominium owners
and residents of furnished and unfurnished apartments. The Property is located in a zone that
does not permit the operation of a hotel.
Condominium owners and tenants of furnished and unfurnished apartments share a
common entrance. The lobby is attended by a doorman and a second attendant, who serve and
assist residents of condominiums and furnished and unfurnished apartments in a similar manner.
As is typically the case with doormen in many apartment buildings in New York City, the
attendants stand guard at the lobby to greet and announce guests, assist residents in hailing taxis
and exiting from cabs, accept packages and deliveries of dry cleaning and groceries on behalf of
residents, and perform other typical doorman-related activities. They may also provide
information relating to the location of various neighborhood services such as dry cleaners, shoe
repair services, grocery stores, delis, and restaurants.
Petitioner represents that the standard agreement entered into by Petitioner with its
tenants is based on a standard landlord/tenant lease agreement that establishes a landlord-tenant
relationship. The standard lease agreement provides that "The Owner and Tenant agree to lease
the Apartment for the Term and at the rent stated" on the terms set forth in the agreement. The
lease agreement provides, among other things:
•
•
•
•
•
•

the monthly rent is due on the first day of each month;
the tenant must give the Owner (Petitioner) a security deposit;
Petitioner may enter the apartment for inspection and to make any necessary
repairs or changes;
during the last month of the lease Petitioner may show the apartment to
prospective renters or purchasers;
if the tenant defaults in the payment of rent Petitioner may go to court to regain
possession of the apartment;
if the tenant defaults in other tenant obligations under the lease, failure to cure the
default after successive notifications by Petitioner will terminate the lease;

-3TSB-A-08(45)S
Sales Tax
October 14, 2008
•
•
•
•

Petitioner may cancel the lease by sending written notice to the tenant if the tenant
files for bankruptcy, or an involuntary petition in bankruptcy is filed against the
tenant;
the tenant must obtain Petitioner's written consent before adding to or changing
the apartment, or installing appliances such as dishwashers, washing machines, or
air conditioners;
the tenant must obtain Petitioner's prior written consent in order to sublet the
apartment; and
the effectiveness of the lease is subject to the approval and acceptance by
Petitioner who may request a credit report on the tenant, and on the delivery to
tenant of a duplicate copy of the lease.

As provided in the standard lease agreement, the monthly rent for furnished units
includes gas for cooking, electricity, cable television, Internet access, and local telephone
service. Weekly housekeeping service and use of an off-site health club are available at the
option of the tenant for a separate charge. When a tenant elects to receive the optional services,
the terms of the lease will outline the optional services with the corresponding additional
charges. Housekeeping services include changing linens, cleaning the apartment, and
loading/unloading dishwashers. Long-distance telephone service is billed separately, and the
appropriate sales tax is collected. Condominium owners may opt to purchase housekeeping
services for a fee. The health club is located off site, and condominium owners and other
building residents may join for an annual fee.
Petitioner advertises the furnished units as being available for rent for a minimum term of
one month. The units are not advertised as hotel units.
Applicable law and regulations
Section 1101(c) of the Tax Law provides, in part:
When used in this article for the purposes of the tax imposed under subdivision
(e) of section eleven hundred five, the following terms shall mean:
(1) Hotel. A building or portion of it which is regularly used and kept open as
such for the lodging of guests. The term "hotel" includes an apartment hotel, a motel,
boarding house or club, whether or not meals are served.
Section 1105 of the Tax Law provides, in part:
On and after June first, nineteen hundred seventy-one, there is hereby imposed
and there shall be paid a tax . . . upon:

-4TSB-A-08(45)S
Sales Tax
October 14, 2008

(a) The receipts from every retail sale of tangible personal property, except as
otherwise provided in this article.
*

*

*

(c) The receipts from every sale, except for resale, of the following services:
*

*

*

(3) Installing tangible personal property . . . or maintaining, servicing or repairing
tangible personal property, . . . not held for sale in the regular course of business, whether
or not the services are performed directly or by means of coin-operated equipment or by
any other means, and whether or not any tangible personal property is transferred in
conjunction therewith, except:
*

*

*

(ii) any receipts from laundering, dry-cleaning, tailoring, weaving, pressing, shoe
repairing and shoe shining;
*

*

*

(5) Maintaining, servicing or repairing real property, property or land, as such
terms are defined in the real property tax law, whether the services are performed in or
outside of a building,. . . .
*

*

*

(e) The rent for every occupancy of a room or rooms in a hotel in this state, except
that the tax shall not be imposed upon (1) a permanent resident, or (2) where the rent is
not more than at the rate of two dollars per day.
Section 527.1(b) of the Sales and Use Tax Regulations provides, in part:
Taxable and exempt items sold as a single unit. When tangible personal property,
composed of taxable and exempt items is sold as a single unit, the tax shall be collected
on the total price.
Section 527.9 of the Sales and Use Tax Regulations provides, in part:
(a) Imposition. A sales tax is imposed on every occupancy of any room or rooms
in a hotel, motel or similar establishment at the combined statewide and local sales tax
rate in effect at the situs of such establishment, except that the tax shall not apply to (1)

-5TSB-A-08(45)S
Sales Tax
October 14, 2008

the charges for occupancy by a permanent resident, or (2) where the charge is $2 or less
per day.
(b) Definitions. As used in this section, the following terms shall mean:
(1) Hotel. A building or portion of it, which is regularly used and kept open for
the lodging of guests. The term hotel includes but is not limited to an apartment hotel, a
motel, bungalow or cottage colony, boarding house or club, whether or not meals are
served.
Opinion
Petitioner owns furnished apartments in a condominium apartment building complex (the
Property). The lobby is attended by a doorman and a second attendant, whose services are
available to all building occupants. There are both furnished and unfurnished apartments in the
Property. Petitioner’s apartments are fully furnished, and Petitioner enters into agreements with
clients for periods of at least one month to up to a year or longer. On occasion, stays of less than
one month are permitted under limited circumstances. Aside from those limited and infrequent
exceptions, residents of furnished apartments sign a lease for a minimum one-month period. In
general, security deposits are required. Petitioner complies with applicable landlord-tenant law
in connection with all eviction proceedings, and all dispute resolutions are handled via
Landlord/Tenant Court. The terms of the standard lease agreement indicate that Petitioner enters
into a landlord and tenant relationship with its tenants.
Leases and subleases of furnished apartments to tenants for periods ranging from one
month to one year or longer, where tenants could subscribe to an optional package from the
landlord for light cleaning, supplies, linen, and laundry, have been determined to be not subject
to the sales tax on hotel occupancy. See KPMG Peat Marwick, Adv Op Comm T&F, February
13, 1991, TSB-A-91(21)S. Unlike hotels, motels, apartment hotels, or similar establishments as
defined under section 1101(c)(1) of the Tax Law and section 527.9(b)(1) of the Sales and Use
Tax Regulations, the landlord in KPMG Peat Marwick, supra, did not offer lodging or
occupancy to transients on a regular or daily basis, but, rather, the landlord rented real property
and entered into valid landlord-tenant relationships with the occupants.
Accordingly, based on the standard lease agreement and presuming Petitioner does not
offer additional amenities or services customarily offered by hotels (e.g., food services,
entertainment, concierge) to its clients, it appears that Petitioner is not operating a hotel. Rather,
Petitioner is renting real property pursuant to a valid landlord and tenant relationship. Therefore,
Petitioner’s charges for the rental of the furnished residential apartments as described above are
not subject to sales tax.
It should be noted, however, that the determination of whether Petitioner is operating a
hotel depends on the specific facts presented by Petitioner and may change if the details

-6TSB-A-08(45)S
Sales Tax
October 14, 2008

concerning the operation of the Property change. Therefore, if changes in the operation of the
Property occur, Petitioner’s charges to its guests for rent may constitute a charge for occupancy
subject to the tax imposed by section 1105(e) of the Tax Law. The conclusion in this Opinion
may also change if Petitioner rents the furnished apartment units for periods of less than one
month.
Petitioner’s clients also may choose to pay an additional fee for optional weekly maid
service with linens and towels changed. The receipts for weekly maid service are subject to sales
tax pursuant to section 1105(c)(5) of the Tax Law. Separately stated and reasonable charges for
linen and towels services may be excluded from tax as laundering, provided that the major
portion of such charge is for laundering or dry cleaning and the value of the article of tangible
personal property bears little relationship to the charge for the services rendered and, provided
further, that such linen and towels services can be purchased separately from the maid service.
See Linen Systems for Hospitals, Inc., Adv Op St Tx Comm, September 25, 1981,
TSB-A-81(14)S; KPMG Peat Marwick, supra. However, sales tax must be collected on the total
price where taxable and exempt services or tangible personal property and exempt services are
sold as a single unit. See section 527.1(b) of the Sales and Use Tax Regulations; and
PricewaterhouseCoopers LLP, Adv Op Comm T&F, March 25, 2003, TSB-A-03(11)S; Salomon
& Leitgeb CPA’s, LLP, Adv Op Comm T&F, July 23, 1997, TSB-A-97(44)S. Therefore,
Petitioner’s single charge to clients for weekly maid service with linens and towels changed is
subject to tax.
Petitioner’s clients may obtain the use of health club facilities for an additional fee. The
health club facilities are off-site and are also available to the building’s other occupants with the
purchase of a health club membership. It should be noted that amounts paid for club
membership or for the use of club facilities may be subject to New York State and local sales
taxes. See sections 1105(f)(2) and 1212-A(a)(2) of the Tax Law.

DATED: October 14, 2008

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Taxpayer Guidance Division

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.