Is reconditioning already-installed kitchen cabinets — new doors, drawer fronts, hinges, pulls, and veneers — a taxable repair service or a tax-exempt capital improvement?

Plain-English summary

Nu*Look Specialists, Inc. reconditions kitchen cabinets that are already installed. Its work includes installing new cabinet doors (with new hinges and pulls), new drawer fronts, and bonding oak veneers to the cabinet stiles, rails, and sides. It asked whether this reconditioning is a capital improvement to real property (which would be tax-exempt) or a taxable service.

The Department held the reconditioning is a taxable repair/servicing of real property — not a capital improvement.

• Two mutually exclusive categories. Reading § 1105(c)(5) and § 1101(b)(9) together, work on real property falls into one but not both of: (1) maintaining, servicing, or repairing, or (2) adding to or improving it by a capital improvement. Once work lands in category (1), the analysis stops — you never reach the capital-improvement test.
• Category (1) is broad. Under 20 NYCRR 527.7(a)(1), maintaining/servicing/repairing covers all activities that keep real property in a condition of fitness, efficiency, readiness, or safety, or restore it to such condition — including not only replacing deteriorated parts but cosmetic embellishments as well.
• These cabinets are real property, and this is servicing them. The already-installed cabinets are treated as real property, and reconditioning them keeps or restores them to a condition of fitness. So the receipts are taxable under § 1105(c)(5), plus any local tax under Article 29 — consistent with Old Craft Furniture Refinishing (TSB-H-81(28)S).

What this means for you

Refacing or reconditioning built-in cabinets is a taxable service, even though it makes them look new. New doors, drawer fronts, and veneers on cabinets that are already in place are treated as servicing/repairing real property. The contractor must collect sales tax on the full charge — labor and materials.

"It looks like an improvement" isn't the test. New York's rule is categorical: if the job is servicing or repairing existing real property, it can't also be a capital improvement, no matter how much it upgrades the appearance. Cosmetic work is expressly inside the taxable category.

Capital-improvement treatment is reserved for a genuine addition or alteration. Installing brand-new cabinetry as part of a larger construction/alteration can be a different story — but freshening up cabinets that are already installed is not. Compare TSB-A-84(33)S (Horn Waterproofing), decided the same day, which taxed masonry/caulking repairs but treated a complete new roof as a capital improvement.

Common questions

Q: I reface my customers' existing kitchen cabinets. Do I charge sales tax?
A: Yes. Reconditioning already-installed cabinets — new doors, drawer fronts, hinges, pulls, veneers — is a taxable service of repairing/servicing real property under § 1105(c)(5). Charge tax on the whole job.

Q: Doesn't making the cabinets look brand-new count as a capital improvement?
A: No. Cosmetic upgrades to existing real property fall in the taxable maintaining/servicing/repairing category. Once work is in that category, it can't also be a capital improvement.

Q: Could a cabinet job ever be a tax-exempt capital improvement?
A: Potentially, if it's a genuine addition or alteration to real property (installing new cabinetry) that meets the three § 1101(b)(9) criteria and is documented on Form ST-124 — not mere reconditioning of what's already installed.

Citations and references

Statutes:

• Tax Law § 1105(c)(5) — tax on maintaining, servicing, or repairing real property, as distinguished from a capital improvement
• Tax Law § 1101(b)(9) — definition of "capital improvement" (addition or alteration meeting three criteria)
• Tax Law Article 29 — local sales taxes

Regulations:

• 20 NYCRR 527.7(a)(1) — scope of maintaining/servicing/repairing real property

Prior guidance:

• Old Craft Furniture Refinishing, TSB-H-81(28)S

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_28s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-84(28)S
Sales Tax
October 15, 1984

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. S820426A

On April 26, 1982 a Petition for Advisory Opinion was received from Nu*Look Specialists,
Inc., 2510 Burnet Avenue, Syracuse, New York 13206.
The issue raised is whether kitchen cabinet reconditioning work performed by Petitioner
constitutes the rendering of capital improvements to real property for purposes of Article 28 of the
Tax Law.
Petitioner is engaged in the business of reconditioning kitchen cabinets. The cabinets on
which the services are performed are already installed. Petitioner installs new cabinet doors, with
new hinges and pulls. New drawer fronts are also installed and oak veneers are bonded to the cabinet
stiles, rails and sides.
Section 1105(c)(5) of the Tax Law imposes a tax on the receipts from every sale, except for
resale, of the services of "Maintaining, servicing or repairing real property, property or land . . . as
distinguished from adding to or improving such real property, property or land, by a capital
improvement . . . ."
Section 527.7(a)(1) of the Sales and Use Tax Regulations states that "Maintaining, servicing
and repairing are terms which are used to cover all activities that relate to keeping real property in
a condition of fitness, efficiency, readiness or safety or restoring it to such condition. Among the
services included are services on a building itself such as painting; . . . lawn services . . . "
Section 1101(b)(9) of the Tax Law defines the term "capital improvement" to mean an
"addition or alteration to real property" which satisfies three specified criteria. Reading sections
1105(c)(5) and 1101(b)(9) of the Tax Law together leads to the conclusions that an operation
performed with respect to real property could fall into, inter alia, one, but not both, of the categories
of (1) maintenance, servicing or repair and (2) the creation of an addition or alteration (which may
or may not satisfy the criteria for capital improvements). If an activity falls into the first category,
thus, an investigation into its status as creating a capital improvement is concluded. Such category,
as is indicated by the quoted provision of the Sales and Use Tax Regulations, encompasses not only
the replacement of deteriorated or otherwise unsatisfactory parts or portions of unitary functional
entities constituting real property, but cosmetic embellishments as well.
The reconditioning work described herein, accordingly, constitutes an activity relating to
keeping the cabinets and drawers, which are presumably themselves real property, in a condition of
fitness and/or restoring them to such condition. Accordingly, receipts from the service provided by
Petitioner are subject to the sales tax imposed under section 1105(c)(5) of the Tax Law, as well as

RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

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

-2­
TSB-A-84(28)S
Sales Tax
October 15, 1984

any similar local sales tax imposed pursuant to the authority of Article 29 of the Tax Law. See Old
Craft Furniture Refinishing, State Tax Commission Advisory Opinion, TSB-H-81(28)S.

DATED: October 31, 1983

s/FRANK J. PUCCIA
Director
Technical Services Bureau