All material and labor charges that you bill your customer for any repair, maintenance, or installation project, including expenses or other surcharges, are subject to tax. Sales of services are generally exempt from New York sales tax unless they are specifically taxable. Real estate services are classified as a capital improvement, repair or maintenance, or an installation service. Installation services include the installation of tangible personal property that remains tangible personal property after installation.
Of course, it's not always clear when a purchase related to construction or real estate is taxable at the time of purchase or sale (or at all), given that some areas of construction and work done on existing real estate are in a gray area as to whether they should be considered repairs and maintenance or capital improvements. In addition, not all states tax labor charges associated with repairs and maintenance, as long as these charges are spelled out separately on invoices, something that many contractors and suppliers don't. Whenever a building undergoes a major renovation, addition, or large-scale repair, auditors will take the opportunity to conduct a full sales and use tax audit in an attempt to assess the sales or use tax that should have been paid. Painting new structures, buildings, or additions is generally considered a capital improvement, while painting existing structures, buildings, or additions is generally identified as routine maintenance.
In addition, companies that manage or own new real estate projects may mistakenly believe that the contractor will pay the tax when, in fact, the project is in fact a repair or maintenance that requires the building owner to pay sales tax. Painting done at the end of a renovation as a kind of cleaning measure, on the other hand, is generally considered taxable maintenance. The building owner must pay taxes on the furniture and the contractor must remit the tax to the state, or the building owner must self-assess the tax and pay it separately. Ohio refers to a capital improvement as a permanent addition, expansion, or alteration that, if built at the same time as the building or structure, would have been considered part of the building or structure, according to Ohio Rev.
Afterwards, a credit can be requested for sales tax paid in the building. materials that were used in a taxable person (i). To document purchases that are exempt, such as construction materials in a job for an exempt organization or a purchase of services from subcontractors for “resale” in a taxable repair or maintenance job, the contractor must use a contractor exempt purchase certificate (Form ST-120,, marking the box corresponding to the exemption claimed. Contractors who perform repair and maintenance work for tax-exempt entities or suppliers who sell tangible personal property to tax-exempt entities may not need to charge sales tax on their invoices.
In most states, taxable purchases for repairs or maintenance that were not taxed at the time of purchase are automatically reported on a monthly, quarterly, or annual sales tax return as taxable purchases. If the final result of the services is the repair or maintenance of real estate, such services are taxable. In addition, exempt entities that perform repair or maintenance work on facilities that produce unrelated business income for them (e.g.