Real Estate Consulting Services Are Not Subject to Sales Tax in New York

Tuesday, March 13th, 2012

 
 
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New York
General

The New York State Department of Taxation and Finance recently issued an advisory opinion discussing the taxability of real estate consulting services. N.Y. Advisory Op. of the Commr. of Taxn. and Fin. TSB-A-12(4)S (Mar. 2, 2012). The petitioner, who is starting a real estate consulting business, plans to offer its customers various consulting services, including locating properties for sale, providing custom observation and analysis of the properties, providing property and neighborhood tours to interested clients, etc. These activities generally consist of collecting, compiling, and analyzing information and providing some type of report to the customer for an agreed upon charge.

New York taxes sales of services only when the service is specifically listed as taxable. See N.Y. Tax Law secs. 1105(b)-(c), (e)-(f), 1110(a). New York does not include consulting services among the services subject to sales tax; however, New York does tax sales of information services, which include collecting, compiling, or analyzing information of any kind or nature. Thus, if the consulting service in question is determined to be an information service, it would be subject to tax. Generally, consulting services are different from information services in that a consulting service provides information that is personal or individual in nature and is not provided to any person other than the consulting client. Because the real estate consulting services discussed in the advisory opinion are individual in nature, provided by the petitioner to a particular client, and not provided to any person other than that client, they should qualify as exempt consulting services as opposed to taxable information services.


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