Does a company owe sales tax on short-term rentals of furnished single-family homes, condos, and apartments that aren't part of a hotel?

Plain-English summary

A company rents out eight furnished units -- single-family homes, two condos, and an apartment (some owned, some leased, one managed for an owner) -- none part of a hotel, motel, or lodging facility. Stays run from two nights to a month or more. It provides linens but doesn't change them, and offers no maid, food, concierge, entertainment, planned activities, or transportation. Customers pay the rent to the company. It asked whether it must collect sales tax.

The Office of Counsel concluded the rentals are not taxable hotel occupancy:

• Sales tax applies to rent for occupancy of a room in a "hotel" (Tax Law section 1105(e)). "Hotel" is a building regularly kept for lodging of guests (section 1101(c)(1)).
• The hotel factors include providing housekeeping/linen/hotel services, transient occupants, and an innkeeper-guest (not landlord-tenant) relationship. But sales tax is not imposed on rentals of real property, and a furnished single-family-occupancy unit (like a bungalow) is not a hotel when the lessor provides no housekeeping, food, or other common hotel services (20 NYCRR 527.9). Furnishing linens without changing them doesn't change the nontaxable status (TSB-M-12(4)S).
• Because these units are single-family occupancy with none of those services, the charges are not subject to State sales tax, and not subject to county/city sales taxes under section 1210.
• The opinion doesn't address any hotel occupancy tax imposed and administered by a locality itself.

What this means for you

Vacation / short-term rental hosts and managers

Renting a whole furnished home, condo, or apartment with no hotel-type services is a nontaxable real-property rental, not taxable hotel occupancy -- even for short stays and even if you lease or manage (rather than own) the unit. Providing linens you don't change is fine.

The trigger is services, not length of stay

Add maid service, meals, concierge, entertainment, or planned activities and the unit can become a taxable hotel. The dividing line is the hotel-type services, not how many nights the guest stays.

Local occupancy taxes are separate

This covers only the state-administered sales tax (state and section-1210 local). Many localities run their own hotel/occupancy taxes -- those are not addressed here, so check the city/county rules.

Common questions

Q: I rent my furnished house for a weekend -- do I charge sales tax?
A: Not as hotel occupancy, if you provide no maid, food, or other hotel services. It's a nontaxable real-property rental.

Q: I provide linens -- does that make it a hotel?
A: No, as long as you don't change the linens and provide no other hotel services.

Q: I only manage or lease the units, I don't own them -- does that matter?
A: No. The result is the same whether you own, lease, or manage the single-family units.

Q: Could a city or county still tax these stays?
A: Possibly. This opinion doesn't address locally imposed and administered hotel occupancy taxes -- check the local rules.

Citations and references

• Tax Law section 1105(e) (sales tax on hotel room occupancy)
• Tax Law section 1101(c)(1) (definition of hotel)
• Tax Law section 1210 (local sales taxes)
• 20 NYCRR 527.9 (hotel occupancy; bungalow/single-family unit rule)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2015.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a15_38s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-15(38)S
Sales Tax
November 13, 2015

Office of Counsel

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S130401A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
REDACTEDREDACTEDREDACTEDREDACTEDREDACTEDREDACTEDREDACTED
(Petitioner). Petitioner asks whether it is required to collect sales tax on its charges to a customer
to rent, for two days or up to a month or longer, a furnished single family home, condominium,
or apartment (a) owned by Petitioner, (b) held by Petitioner under a lease, or (c) managed by
Petitioner, and none of which are part of a hotel, motel, or other lodging facility.
We conclude that Petitioner’s rental units are not rooms in a hotel and its charges to rent
the units without any “hotel” services are not subject to the State and local sales taxes
administered by the Department.
Facts
Petitioner currently rents out eight furnished units in Onondaga and Cayuga Counties to
the public. Five of the units are one-family dwellings owned by Petitioner or its principal
shareholder, two are condominium units, and one is an apartment. The two condominium units
are not owned by Petitioner or a related entity, but are leased to Petitioner for a term in excess of
a year. The apartment is managed by Petitioner on behalf of its owner. The units are not part of
a hotel, motel, or other lodging facility. All of the units are single-family occupancy and are
rented furnished. In addition, linens are provided, but the linens are not changed. There is no
maid service or food or concierge service. Petitioner does not provide entertainment, planned
activities, or transportation services. There is no restaurant, vending machine, or other food
service provided in connection with the rental units.
The rental periods are for a minimum of two nights, up to periods of a month or longer.
The rentals are advertised to the general public through Petitioner’s own website and other
publicly accessible websites, as well as by word of mouth. Customers pay the rental charges to
Petitioner in all cases, including the rental of the units that Petitioner leases from, or manages
for, others.
Analysis
With certain exceptions not relevant here, sales tax is imposed on the rent for every
occupancy of a room or rooms in a hotel. See Tax Law § 1105(e). “Hotel” means a building or
portion of it which is regularly used and kept open as such for the lodging of guests, and includes
an apartment hotel, a motel, boarding house, or club, whether or not meals are served. See Tax
Law § 1101(c)(1).

-2-

TSB-A-15(38)S
Sales Tax
November 13, 2015

A building, or portion of the building, falls within the definition of “hotel” if, among
other factors (i) sleeping accommodations are provided for the lodging of paying occupants on a
regular basis; (ii) typical occupants are transients or travelers; (iii) housekeeping, linen, or other
customary hotel services are provided for occupants; and (iv) the relationship between the
operator of the establishment and the occupant is that of an innkeeper and guest, not that of a
landlord and tenant (e.g., the occupant does not have an exclusive right or privilege with respect
to any particular room or rooms, but instead merely has an agreement for the use or possession of
the room or rooms). However, sales tax is not imposed on rentals of real property. A bungalow
or similar furnished living unit limited to a single-family occupancy is not a hotel, and thus not
subject to the sales tax on hotel occupancy, provided no housekeeping, food, or other common
hotel services, such as entertainment or planned activities, are provided by the lessor. The
furnishing of linen by the lessor without the service of changing the linen does not alter the
nontaxable status of any rental charges. See 20 NYCRR § 527.9(b)(1), (e)(3)(ii), and (e)(5).
Rent received for occupancy of a bungalow or similar living unit would be subject to tax if the
lessor provides any of these services, entertainment, or planned activities. See TSB-M-12(4)S.
Each of Petitioner’s rental units is for single-family occupancy. Petitioner does not
provide any maid service, food or concierge service, or transportation services. Nor does it
provide any entertainment, planned activities, or restaurant, vending machine, or other food
service in connection with the rentals. While Petitioner does provide linens, it does not change
the linens. Therefore, Petitioner’s rental units are not rooms in a hotel and its charges to rent the
units without any of the described services are not subject to State sales tax. Nor are its charges
subject to county or city sales taxes imposed pursuant to the authority of Tax Law § 1210. This
opinion does not address the taxability of Petitioner’s charges under a hotel occupancy tax
imposed and administered by a locality itself.

DATED: November 13, 2015

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

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. The information provided in this
document does not cover every situation and is not intended to replace the law or
change its meaning.