State Proposes Sales Tax on Preservation Projects

According to the New York Landmark Society a proposed change in New York State Tax Law would adversely affect preservation projects in the state:

A proposed change to the New York State Tax Law would harm preservation and increase sales tax on preservation projects by narrowing the definition of “capital improvements” on buildings. The new language would limit the definition to apply only to projects that constitute “new construction, or a new addition to or total reconstruction of existing construction.” This is a change from the current definition which allows an exemption of sales tax on labor for the many preservation projects whose scope is less than 100% reconstruction of a building.

As a result of the proposed change, many renovations, restorations and rehabilitations of existing buildings would no longer qualify as “capital improvements” and the labor associated with these projects would become subject to the State sales tax (4%), and possibly also the New York City sales tax (4%) and MTA sales tax (.375%). At present, these projects generally pay sales tax on building materials but not on labor.

Please e-mail Governor Paterson today by clicking here saying:”please continue using the current definition of ‘capital improvement’ in part PP of Tax Law 1101(b)(9) and not limit it to new construction. The proposed changes work against preservation projects by adding a sales tax to the cost of labor. Preservation projects promote economic revitalization, build communities, and save energy.”