New York Tax Law §1105(c) excludes from tax the installation of property that when installed would be a capital improvement to real property, as defined by Tax Law §1101(b)(9).
- The term “capital improvement” is defined as an addition or alteration to real property that:
- Substantially adds to the value of the real property, or appreciably prolongs the useful life of the real property;
- 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;
- Are intended to become a permanent installation
Even if a lease states that prior to the expiration of a lease, the lessor can decide that the alterations must be removed, TSB-M-83(17)S states that “granting the lessor the right to require removal of the improvement will not negate this demonstration of intention of permanence.”
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