Are receipts from renting self-serve mini-storage units subject to NY sales tax as a storage service, or are they a nontaxable real-property lease?

Plain-English summary

The Petitioner runs a self-serve mini-storage facility, renting units to customers under a standard lease that names the unit number, building, size, and space. Units are in special-purpose buildings, separated by metal partitions. The customer supplies its own lock, has unrestricted 24/7 access, and may bring its own racks, cabinets, and fixtures. The Petitioner can enter only in an emergency, to inspect/repair, or after a 60-day rent default, and provides no other services (no transportation, loading, or unloading).

The Office of Counsel concluded the rentals are not taxable:

• Storage service is taxable -- but this isn't one. Section 1105(c)(4) taxes "storing tangible personal property" and renting "safe deposit boxes or similar space." But the essence of a taxable storage service is that the owner relinquishes possession and control of the goods to the provider (e.g., the provider receives, handles, or stores the customer's property). The Petitioner does none of that.
• This is a lease of real property. Sales tax applies to the provision of storage space but not to the lease of real property for storage. Under 20 NYCRR 527.6(b)(2), a lease exists where the tenant contracts for a certain amount of footage in a specific location, has unlimited control of access, and may supply its own racks/cabinets/fixtures -- exactly these facts (the lease names the unit/size/location; customer locks it, accesses it year-round, brings its own racks; the operator is barred from entry except emergency/inspection/repair/60-day default). (TSB-M-86(3)S.)
• Result: because it meets the lease standard and the customer never gives up possession or control, the charges are not subject to State or local sales tax.

What this means for you

Self-storage operators

A typical self-serve unit -- the customer gets a specific, sized space, uses their own lock, has their own access, and you can't get into it except for emergencies/repairs/default -- is a nontaxable real-property lease, not a taxable storage service. Don't charge sales tax on the unit rent.

What would make it taxable

You cross into a taxable storage service if you take possession/control of the goods -- e.g., you receive, handle, move, or store the customer's property, or the customer lacks free access. Adding services like loading, transport, or managed storage can change the answer.

Common questions

Q: Do I charge sales tax on self-storage unit rentals?
A: No -- a self-serve unit where the customer keeps the key/lock, has free access, and you can't enter except for emergencies/repairs/default is a nontaxable real-property lease.

Q: When is storage taxable?
A: When the owner relinquishes possession and control to you -- you receive, handle, or store their goods -- that's a taxable storage service under section 1105(c)(4).

Q: Can I rely on this opinion?
A: It binds the Department only as to the petitioner. Use it as guidance and confirm your own facts.

Citations and references

• Tax Law section 1105(c)(4) (sales tax on storage services and rental of safe deposit boxes or similar space)
• 20 NYCRR section 527.6(b)(2) (lease of real property distinguished from storage space)

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_6s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-15(6)S
Sales Tax
March 18, 2015

Office of Counsel

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S140324A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED REDACTED
(Petitioner). Petitioner asks whether receipts received for rental of self-serve mini-storage units
from its customers constitute a lease of real property for storage and, therefore, are not subject to
New York State sales tax.
We conclude that Petitioner’s rental of self-serve mini-storage units constitutes rental of
real property, the receipts from which are not subject to sales tax.
Facts
Petitioner operates a self-serve mini-storage facility and rents mini-storage units to
individuals pursuant to a standard lease agreement. The lease agreement identifies the unit
number, the building, the size and the space rented to each customer. The storage units are
housed in two separate special purpose buildings. The units are of different sizes and are
separated from one another by metal partitioning.
The customer provides his or her own lock and has unrestricted access to the leased
storage unit. The self-service storage facility is open 24 hours a day, 7 days a week and 52 weeks
a year. The customer can supply his or her own racks, cabinets, and other physical facilities.
Petitioner can enter the rented unit only in an emergency, in order to inspect and conduct
repairs and improvements, and in the event of non-payment of rent after 60-days. Other than the
rental of storage units, Petitioner does not provide any other service(s), such as transportation,
loading and unloading, to its customers.
Analysis
Tax Law § 1105(c)(4) imposes sales tax on receipts from the service of “[s]toring all
tangible personal property not held for sale in the regular course of business and the rental of
safe deposit boxes or similar space.”
We conclude that Petitioner is not providing a storage service. The essence of a storage
service subject to sales tax is the relinquishment of possession and control of the stored goods by
their owner to the person providing the storage service. Examples of this would be receiving,
handling, or storing of the lessee's personal property by the lessor. In the instant case, Petitioner

-2-

TSB-A-15(6)S
Sales Tax
March 18, 2015

does not provide any such service or any other service that would require the owner of the goods
to relinquish to Petitioner possession and control of the goods.
We further conclude that Petitioner’s charges to its customers are charges for the rental of
real property rather than taxable receipts from the provision of storage space. Although sales tax
is imposed on the provision of storage space, “it is not imposed on the lease of real property for
storage. A lease can be distinguished from the provision of storage space, in that under a lease,
the tenant contracts for a certain amount of footage in a specific location, the tenant has
unlimited control of access to the space, and may supply his own racks, cabinets and other
physical facilities.” See 20 NYCRR § 527.6(b)(2).
Here, Petitioner contracts with its customers to rent specific storage units with a stated
amount of square footage in a specific location. Petitioner’s lease identifies the unit number, the
building, the size and the space rented to each customer. Customers have unlimited control
because they have access to the storage unit year round, are required to place their own lock on
the storage unit, and may provide their own storage racks, cabinets or other physical facilities.
The lease specifically prohibits entry by Petitioner into the storage unit except in the event of an
emergency, to inspect and repair the premises, or in the case of a default of 60 days or more in
the payment of rent. See TSB-M-86(3)S.
Because Petitioner’s rental of storage units meets the standards for a lease under Sales
and Use Tax Regulation § 527.6(b)(2), and the customer does not relinquish possession or
control of its stored property to Petitioner, Petitioner’s charges to its customers for self-serve
mini-storage units are not subject to State and local sales taxes.

DATED: March 18, 2015

NOTE:

/S/
DEBORAH 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.