Is installing new linoleum over an entire room's floor a tax-exempt capital improvement, no matter what surface it's glued over?

Plain-English summary

Jason G. Robinson had new linoleum installed in his home's kitchen and bathroom, glued over a base in each room — over particle-board subflooring in the bathroom and over an existing tile floor in the kitchen. The installer collected tax on the kitchen work but not the bathroom work. Robinson applied for a refund and asked whether the complete linoleum installation is a capital improvement.

The Department held the whole-room linoleum installation is a capital improvement — and the distinction the installer drew was wrong.

• Installation is taxable unless it's a capital improvement. Section 1105(c)(3) taxes installing tangible personal property except where the installation is an addition or capital improvement to real property.
• The three-part capital-improvement test. Under § 1101(b)(9), a capital improvement (i) substantially adds value or appreciably prolongs the property's useful life; (ii) becomes part of, or is permanently affixed to, the realty so that removal would cause material damage; and (iii) is intended to be a permanent installation.
• Whole-room linoleum, cemented down, qualifies — regardless of the base. Installing linoleum over the floor of an entire room by means of cement is a capital improvement, and this is so irrespective of the nature of the floor over which it is installed (S & Y Floor Covering, TSB-H-81(50)S). The kitchen (over tile) and bathroom (over particle board) are treated the same.
• The installer confused linoleum with carpeting. The distinction the installer applied — taxing one room but not the other — is one that applies to carpeting, not linoleum (S & Y Floor Covering; Norman W. Ayers, TSB-H-82(162)S). So the kitchen linoleum was also a capital improvement, supporting Robinson's refund.

What this means for you

Cementing a new floor covering across a whole room is generally a capital improvement. Linoleum glued down over an entire room's floor is a permanent, damage-on-removal installation that meets the § 1101(b)(9) test — so the installed job isn't taxed to the customer as a taxable installation.

Don't assume the surface underneath changes the answer for linoleum. Whether it goes over old tile, particle board, or another base, whole-room linoleum installation is a capital improvement. The base surface doesn't drive the result.

Linoleum and carpeting aren't treated alike. Some flooring distinctions (which installs are taxable) apply to carpeting but not to cemented linoleum. If you were charged sales tax on a permanent whole-room linoleum installation, this opinion supports a refund claim. (For a broader capital-improvement contrast, see TSB-A-84(33)S, where a complete new roof was a capital improvement but partial roof repair was taxable.)

Common questions

Q: I had new linoleum cemented across my whole kitchen floor. Should I have been charged sales tax?
A: Generally no. Installing linoleum over an entire room's floor with cement is a capital improvement, so the installed job isn't a taxable installation — regardless of what it was laid over.

Q: The installer taxed one room but not another. Was that right?
A: Not for linoleum. The Department said that room-by-room distinction applies to carpeting, not linoleum. Both cemented whole-room linoleum jobs were capital improvements.

Q: Can I get a refund if I was charged tax on this kind of installation?
A: This opinion supported the homeowner's refund application for the wrongly taxed kitchen work. If you were taxed on a qualifying capital-improvement installation, you may have a refund claim — confirm with the Department or a tax professional.

Citations and references

Statutes:

• Tax Law § 1105(c)(3) — tax on installing tangible personal property, except capital-improvement installations
• Tax Law § 1101(b)(9) — three-part definition of "capital improvement"

Prior guidance:

• S & Y Floor Covering, TSB-H-81(50)S
• Matter of Norman W. Ayers, TSB-H-82(162)S
• Opinion of Counsel, August 19, 1965, 1965 NYTB v. 3, p. 41

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1984.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a84_21s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-84(21)S
Sales Tax
August 20, 1984

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S831206A

On December 6, 1983 a Petition for Advisory Opinion was received from Jason G. Robinson,
589 Thompson Street, Elmira, New York 14904.
The issue raised is whether the complete installation of a new linoleum floor constitutes a
capital improvement to real property.
Petitioner contracted for new linoleum to be installed in the kitchen and bathroom of his
home. The linoleum floor covering was installed in the same manner in each room, being glued over
a base. The bathroom base consisted of particle board sub-flooring, while the kitchen base consisted
of an existing tile floor. Sales tax was collected on the portion of the charge attributable to the work
done in the kitchen, while no tax was charged with respect to the work performed in the bathroom.
Petitioner has filed an application for refund of the tax paid.
Section 1105(c)(3) of the Tax Law imposes a tax on the receipts from the sale of the service
of installing, maintaining, servicing or repairing tangible personal property, except when such
installation will constitute an addition or capital improvement to real property. Section 1101(b)(9)
of the Tax Law defines the term "capital improvement" as any addition or alteration to real property
which "(i) Substantially adds to the value of the real property, or appreciably prolongs the useful life
of the real property; and (ii) Becomes part of the real property or is permanently affixed to the real
property so that removal would cause material damage to the property or article itself; and (iii) Is
intended to become a permanent installation."
In accordance with the foregoing, the installation of linoleum over the floor of an entire room
by means of cement constitutes a capital improvement to real property. This is so irrespective of the
nature of the floor over which it is installed.
S & Y Floor Covering, State Tax Commission Advisory
Opinion, TSB-H-81(50)S; Opinion of Counsel, August 19, 1965, 1965 NYTB v. 3, p.41. The
distinction made by the contractor in the present instance is in fact applicable to carpeting, but not
to lineoleum. S & Y Floor Covering, supra; Matter of Norman W. Ayers, State Tax Commission,
TSB-H-82(162)S.

DATED: July 27, 1984

s/FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.
RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR