Are weekly rentals of self-contained motel housekeeping/efficiency units subject to New York sales tax when no hotel services are provided?

Plain-English summary

Juliana Motel (Diamond Point, NY) asked whether its charges for renting housekeeping and efficiency units are subject to sales tax. About half of its units are self-contained — each with its own kitchen, bathroom, and sleeping room — and no services are provided with them. The motel rents these units weekly through the summer.

The Department held the rentals are not taxable on these facts, applying the bungalow rule in 20 NYCRR § 527.9(e)(5):

• A lessor who rents furnished living units limited to single-family occupancy is not the operator of a hotel, and the rents for such units are not taxable, provided that:
  • (i) the lessor provides no maid, food, or other common hotel services — such as entertainment or planned activities; and
  • (ii) the rental is for at least one week.
• The regulation adds that furnishing linen with the rental — without the service of changing the linen — does not change the nontaxable status.
• The Department cited Breezy Point Surf Club, Inc. v. State Tax Commission, 67 AD2d 760, where the Appellate Division held that charges for the use of cabanas were rentals of real property (each cabana being a bungalow or apartment), not taxable dues.

Because Juliana Motel's self-contained units are rented for at least a week with no maid, food, or other common hotel services or planned activities, the rental charges are not subject to sales tax.

What this means for you

Self-contained weekly rentals can fall outside the hotel-occupancy tax

New York taxes hotel/motel occupancy, but a furnished, single-family living unit rented by the week with no hotel services is treated like a bungalow or apartment rental of real property — which is not taxed. The distinction is service, not the name on the sign: a "motel" can have nontaxable bungalow-style rentals if it truly provides none of the common hotel services.

The two conditions are strict — and providing services flips the result

To stay nontaxable, you must clear both conditions: at least a one-week term and no maid, food, or other common hotel services (including entertainment or planned activities). Add daily maid service, meals, or organized activities and the unit looks like taxable hotel occupancy again. Note the narrow linen allowance: supplying linen is fine, but changing the linen is a service that can jeopardize the treatment.

This is fact-specific 1991 guidance

The opinion binds only Juliana Motel on its stated facts. If your operation differs — shorter stays, bundled services, or mixed unit types — the analysis can change. Confirm current rules and your own facts before relying on it.

Common questions

Q: Do I charge sales tax on a weekly rental of a motel efficiency unit with a kitchen and bath?
A: Not if you provide no maid, food, or other common hotel services and the rental is for at least one week — then it is a nontaxable bungalow-type rental under § 527.9(e)(5).

Q: Can I supply linens and stay nontaxable?
A: Yes, you can furnish linen — but if you also change the linen (a service), that can undermine the nontaxable treatment.

Q: What if I add maid service or planned activities?
A: Providing maid, food, or other common hotel services (including entertainment or planned activities) makes the rental look like taxable hotel occupancy.

Citations and references

Regulation and case:

• 20 NYCRR § 527.9(e)(5) — a lessor of furnished single-family living units (bungalows) is not a hotel operator; rents are nontaxable if no maid/food/other common hotel services are provided and the rental is at least one week (linen furnished without changing it does not alter the result)
• Breezy Point Surf Club, Inc. v. State Tax Commission, 67 AD2d 760

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1991.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a91_44s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-91 (44)S
Sales Tax
May 23, 1991

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S910329A

On March 29, 1991 a Petition for Advisory Opinion was received from the Juliana Motel,
P.O. Box 63, Diamond Point, New York 12824.
The issue raised by Petitioner, Juliana Motel, is whether its charges for the rental of
housekeeping and efficiency units at its facility is subject to the imposition of sales tax.
Petitioner's facility contains approximately 50% housekeeping and efficiency units each
containing its own kitchen, bathroom and sleeping rooms. No services are provided for these units.
Petitioner rents these facilities on a weekly basis through the summer.
Section 527.9(e)(5) of the Sales and Use Tax Regulations provides that:
A lessor of bungalows, who rents bungalows which are furnished living units
limited to a single-family occupancy, is not the operator of a hotel. Therefore, the
rents for the occupancy of such bungalows are not taxable, provided:
(i)
no maid, food or other common hotel services, such as
entertainment or planned activities, are provided by the lessor; and
(ii)

the rental is for at least one week.

The furnishing of linen by the lessor with the rental of a bungalow, without the
service of changing the linen, does not alter the nontaxable status of the rental
charges.
The Appellate Division has held that the charges for the use of cabanas was not a charge for
dues but was for the rental of real property and that each cabana constituted a bungalow or an
apartment; (Breezy Point Surf Club, Inc. v. State Tax Commission 67 A.D. 2d 760).

-2­
TSB-A-91 (44)S
Sales Tax
May 23, 1991

Therefore in accordance with Section 527.9(e)(5) of the Sales and Use Tax Regulations,
Petitioner's rental of housekeeping and efficiency units for a term of at least one week will not be
subject to the imposition of sales tax provided that it provides no maid, food or other common hotel
services or planned activities.

DATED: May 23, 1991

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.