Must a housing co-op charge sales tax on the parking and garage fees it bills tenant-shareholders who own their spaces through allocated shares?

Plain-English summary

Mark R. Posner, CPA, asked on behalf of a client — a cooperative housing corporation — whether the co-op must collect sales tax on the rental fees it charges tenant-shareholders for garage and parking spaces on the premises.

The key facts: the co-op's prospectus assigns shares of the corporation to each garage and parking space, just as shares are assigned to apartments. A tenant-shareholder must purchase the shares to use a space. The co-op then charges a rental fee at the same per-share rate for apartments, garage spaces, and parking spaces, and uses that money to pay the building's expenses (real estate taxes, repairs, payroll, general maintenance).

The Department said the fees are not taxable. Tax Law § 1105(c)(6), effective June 1, 1990, taxes the service of "providing parking, garaging or storing for motor vehicles by persons operating a garage ... parking lot or other place of business engaged in providing parking." But here, the tenant-shareholder is the owner of the parking space, through the co-op shares allocated to it — exactly as they own their apartment through the shares allocated to it. Because the rental fees are not receipts from operating a garage, parking lot, or other parking business, they are not subject to the § 1105(c)(6) tax.

What this means for you

Ownership through co-op shares changes the tax character

The § 1105(c)(6) parking tax targets someone operating a parking business and selling parking to customers. When a resident owns their parking space — here, by buying the co-op shares allocated to it — the fee the co-op collects isn't payment for a parking service; it's a shareholder's contribution to building expenses tied to property the shareholder already owns. That's outside the parking tax.

The structure matters: shares allocated to the space

What made this work was that the spaces were share-allocated and had to be purchased, and were billed at the same per-share rate as apartments to cover common building costs. A co-op or condo that instead rents out spaces to residents or the public as a parking operation — charging for parking as a service — would be much more likely to owe the § 1105(c)(6) tax. Look at whether the resident owns the space or is simply buying parking.

Boards and managing agents

If your governing documents allocate shares to parking and garage spaces and fold the fees into per-share maintenance, this opinion supports not charging sales tax on them. Keep the prospectus/offering plan language handy — the ownership structure is what drives the result.

Common questions

Q: Does the co-op have to charge sales tax on parking fees to its shareholders?
A: No, not on these facts. Because the tenant-shareholder owns the space through allocated shares, the fees aren't receipts from operating a parking business under § 1105(c)(6).

Q: Why does ownership through shares matter?
A: The parking tax reaches people operating a garage or parking lot and selling parking. A shareholder who owns their space isn't buying a parking service — they're paying maintenance on property they own.

Q: Would it be taxable if the co-op rented spaces out as a parking operation?
A: Likely yes. Providing parking for a fee as a parking business is exactly what § 1105(c)(6) taxes; the exemption here rests on the shareholder's ownership of the space.

Citations and references

Statutes, regulations, and authorities:

• Tax Law § 1105(c)(6), effective June 1, 1990 (tax on providing parking, garaging, or storing for motor vehicles by persons operating a garage, parking lot, or other parking business)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1992.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a92_21s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-92 (21) S
Sales Tax
March 11, 1992

Taxpayer Services Division
Technical Services Bureau

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S910904A

On September 4, 1991 a Petition for Advisory Opinion was received from Mark R. Posner
CPA, 2545 Hempstead Turnpike, East Meadow, New York 11554.
The issue raised by Petitioner, Mark R. Posner CPA, is whether Petitioner's client, a co­
operative housing corporation, should collect sales tax on rental fees charged by it on shares
allocated to garage spaces/parking spaces.
Petitioner's client is a co-operative housing corporation. Located on the premises are garage
spaces and parking spaces. As set forth in prospectus of the co-operative housing corporation, these
spaces have shares of the corporation assigned to them just like apartments shares. The garage spaces
and parking spaces must be purchased by the tenant shareholders in order to use them. The rental fee
is charged by the corporation at the same rate per share for apartments. garage spaces and parking
spaces. It is used to pay all expenses of the building (i.e. real estate taxes, repairs, payroll, general
maintenance, etc.).
Section 1105(c)(6) of the Tax Law effective June 1, 1990 imposes sales tax upon the service
of:
Providing parking, garaging or storing for motor vehicles by persons operating a
garage (other than a garage which is part of premises occupied solely as a private one
or two family dwelling), parking lot or other place of business engaged in providing
parking, garaging or storing for motor vehicles.
In the instant case the tenant-shareholder is the owner of the parking space represented by
the shares of stock of the co-operative corporation owned by him and allocated to his parking space
just as he is the owner of the apartment represented by the shares of stock of the corporation owned
by him and allocated to his apartment. Since the receipt of the rental fees set forth above from the
tenant shareholders do not constitute receipts from the operation of a garage, parking lot or other
place of business providing parking, garaging or storage of motor vehicles, such receipts are not
subject to the tax imposed by Section 1105(c)(6) of the Tax Law.

DATED: March 11, 1992

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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