New York – Real Estate Consulting Services Not Taxable

SALT Report 1476 – The New York Department of Taxation and Finance ruled that a taxpayer’s real estate consulting services are not subject to New York state or local sales and use taxes.  The taxpayer’s services include collecting, compiling, and analyzing information, providing reports to clients, locating properties, and property management.
The taxpayer does not prepare any written reports and does not provide information developed for his clients that can be used by any other person.  Additionally, the guidance provided by the taxpayer is based on information that he gathers from looking at real estate or from evaluations made while consulting with his client’s tenants or on-site property managers.
Although some of the taxpayer’s billable activities may be taxable under section 1105(c)(1) which imposes tax on the sale of information services and reports provided to clients, however, the law states that the information must be in written form or in a form that can be reproduced in any manner.  Also, the same tax law specifically excludes from sales and use taxes information services that are “personal or individual in nature and that are not, or cannot, be included in reports furnished to anyone other than the purchaser of the service.”
Furthermore, the Department determined that the taxpayer’s services are not subject to sales tax as “services used in maintaining, repairing, or servicing real property”  under Tax Law §1105(c)(5). The taxpayer does not repair, maintain, or service any of his clients’ properties, nor does he contract with any service providers to repair, maintain, or service any of his clients’ properties.  The taxpayer’s clients use their own employees or independent contractors to do work on the client’s property.
Based on the above information, the Department determined that the taxpayer merely provides consulting services which are not one of the services subject to tax under New York Tax Law §1105 or §1110.
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