I rent fully furnished condominium apartments in a New York City tower complex on month-to-year-or-longer leases, with the same daily housekeeping and amenities offered equally to all residents -- do I owe New York's hotel occupancy tax on the rent?

Plain-English summary

Milro Associates owns furnished apartments across a two-wing New York City condominium complex — a 22-story "Base Building" and a 50-story "Tower" whose lower 14 floors mix furnished rentals, unfurnished rentals, and owner-occupied condos, with the Tower's upper floors reserved entirely for condo owners. Furnished units (studios through penthouse suites) are leased for one month up to a year or longer, some to the same tenants for 11-12 years, with tenants drawn from corporate long-term assignees, people maintaining a New York residence, and others. As in the same-day companion filing (Battery Place Associates, TSB-A-08(45)S), Milro's building has no hotel-style amenities — no restaurants, room service, minibars, concierge, or front-desk billing — just doormen shared identically across condo owners and both classes of renters. The key factual difference from that companion opinion: here, monthly rent bundles in daily housekeeping (cleaning, changing linens, loading/unloading dishwashers) and health club access located within the complex itself, rather than offering those as separate optional add-ons.

The Department reached the same result: Milro is not operating a hotel. Applying its long-standing test (from a 1991 KPMG Peat Marwick opinion, reaffirmed in a 2003 ExecuStay Corporation opinion involving similar extended-stay facts), the Department looks at whether the landlord has a genuine landlord-tenant relationship — security deposits, formal eviction procedures through Landlord/Tenant Court, month-or-longer minimum terms — rather than offering transient lodging to guests on a daily basis. Milro's standard lease checks all those boxes, and critically, unlike a hotel it doesn't offer food service, entertainment, concierge service, or other classic hotel amenities. Because the daily housekeeping and health club access here are bundled into the base rent (rather than charged as a separate maid-service line item, as in the Battery Place companion opinion), this opinion doesn't need to separately analyze whether an add-on maid charge is taxable — the whole monthly rent is treated as one non-hotel rental charge.

As with the companion opinion, the Department flagged that this conclusion is entirely fact-dependent: it could change if Milro's operations later add hotel-type amenities, or if it starts renting units for terms shorter than one month.

What this means for you

Furnished-apartment and extended-stay rental operators

Whether housekeeping is bundled into your rent or billed as a separate add-on, the core test for staying out of hotel occupancy tax is the same: a genuine landlord-tenant relationship (security deposits, formal eviction process, month-plus minimum terms) and the absence of hotel-style amenities like food service, concierge, or front-desk billing.

Mixed-use condo/rental buildings

A building combining owner-occupied condos with furnished and unfurnished rental units, sharing doormen and common facilities, doesn't automatically become a "hotel" for tax purposes just because it offers amenities like a health club — what matters is the lease structure and the presence (or absence) of hotel-type services.

Accountants and tax professionals

This opinion and its same-day companion (TSB-A-08(45)S) are a matched pair worth citing together: both apply the identical KPMG Peat Marwick/ExecuStay test to two different luxury NYC furnished-rental operators, reaching the same non-taxable result even though one bundles housekeeping into rent and the other bills it separately — useful for showing clients the test turns on the landlord-tenant relationship and amenity mix, not on billing mechanics alone.

Common questions

Q: If daily housekeeping is included in my furnished apartment's monthly rent (not billed separately), does that make me a "hotel" for tax purposes?
A: Not by itself. The Department's test focuses on whether you have a genuine landlord-tenant relationship and lack hotel-style amenities (food service, concierge, front-desk billing) — bundling routine housekeeping into rent for month-plus leases didn't change the result here.

Q: Does having a health club within the building affect the hotel-tax analysis?
A: Not decisively — the Department looked at the overall absence of hotel-type amenities (restaurants, room service, concierge) rather than treating an on-site health club alone as hotel-like.

Q: Does this ruling apply to my furnished-rental building?
A: Not automatically. This is an Advisory Opinion binding only on Milro Associates and only as to the facts it described, and the Department notes the conclusion depends heavily on lease terms and amenities that could change. See also the same-day companion opinion TSB-A-08(45)S (Battery Place Associates) reaching the identical result for a similar operator.

Citations and references

Statutes and regulations:

• Tax Law §1101(c)(1) (definition of "hotel")
• Tax Law §1105(e) (hotel room occupancy tax)
• 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)
• ExecuStay Corporation, TSB-A-03(15)S (similar extended-stay facts, same result)

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_46s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Taxpayer Guidance Division

TSB-A-08(46)S
Sales Tax
October 14, 2008

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S070326C

On March 26, 2007, the Department of Taxation and Finance received a Petition for
Advisory Opinion from Milro Associates, c/o Kaplan, 335 Madison Avenue, 15th Fl., New York,
New York 10017. Petitioner, Milro Associates, 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

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Sales Tax
October 14, 2008

provided, no business centers, and no front desk where billing activities are carried on, payments
accepted, and bills adjusted.
The Property consists of two residential wings that will be referred to as the Base
Building and the Tower. The Base Building is 22 stories high and includes furnished
apartments, unfurnished apartments, and owner-occupied condominiums. The Tower is 50
stories high, of which the first 14 floors include furnished and unfurnished apartments, as well as
owner-occupied condominium apartments. The remainder of the Tower includes only owneroccupied condominium apartments. All units were built to be sold as residential apartments
covered by the original offering plan on file with the Attorney General’s office. Those units 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 and include one-bedroom and two-bedroom apartments and junior and penthouse suites.
Each apartment includes bathrooms and a fully equipped kitchen; bed linens and towels are also
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.
There are two separate entrances to the Property; one which services the owner-occupied
Tower condominium units above the 14th floor and another entrance that services the Base
Building and the first 14 floors of the Tower, which, as noted above, include both furnished and
unfurnished apartments and owner-occupied condominium units that may be located on any one
floor.
Notwithstanding the two entrances, residents of the entire complex receive identical
services from lobby attendants, whether they own their own units or occupy furnished or
unfurnished rental units. There are two attendants in each lobby area, a doorman and a second
attendant, who perform similar services for residents of furnished apartments, unfurnished
apartments, and condominium owners. In fact, the same attendants alternate duties between both
lobbies of the Base Building and Tower. They perform services typical of doorman and lobby
attendants in high end, luxury apartment buildings located in New York City. 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; they assist residents in hailing taxis and exiting from
cabs; they accept packages and deliveries of dry cleaning and groceries on behalf of residents;
and they 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.

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Sales Tax
October 14, 2008

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:
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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;
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, 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, daily housekeeping service which includes
cleaning, changing linens, and loading and unloading dishwashers, and use of a health club
located within the complex. Local and long-distance phone service is billed separately, for
which applicable sales tax is collected. Annual membership in the health club is available to
condominium owners and other building residents.
There is no room service; and there are no minibars, restaurants, business centers,
newsstands, or interior retail shops selling goods or services. The Property is similar to other
buildings within the residential community in which it is located.
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.

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Sales Tax
October 14, 2008

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

*

*

(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 527.9 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)
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.

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Sales Tax
October 14, 2008

Opinion
Petitioner owns furnished apartments in a condominium apartment building complex (the
Property). There are both furnished and unfurnished apartments in the Property. The lobbies in
the Property are attended by a doorman and a second attendant, whose services are available to
all building occupants. Petitioner’s apartments are fully furnished, and Petitioner enters into
agreements with clients for periods of at least one month 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 landlordtenant 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. ExecuStay
Corporation, Adv Op Comm T&F, April 4, 2003, TSB-A-03(15)S, involved similar facts to
KPMG Peat Marwick, supra, and similarly concluded that the apartment rentals in question were
not subject to sales tax.
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
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

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Sales Tax
October 14, 2008

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.

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.