Sales tax on a gut renovation

Look up Capital Improvements on the NYS tax department website. The short version is that for a qualified capital improvement to real property (i.e. a gut renovation), sales tax is due on materials only. Labor for capital improvements is not subject to sales tax. So when you buy cabinets, appliances, tile, etc., that is subject to sales tax. The contractor's work is not. The contractor is required to have you sign a Certificate of Capital Improvement form, to document their justification for not collecting sales tax.

Uptown_Joe,
Thanks for your help. Where would I get the certificate of capital improvement form please?
Bob.

Your contractor has the form. Note that the form in most respects really just shifts the risk of non-payment from the seller to the buyer.

There is a fair amount of "fine print" on how this breaks out for certain "materials" as well, and half of the contractors/trades will say the other half is doing it wrong (and some small percentage of those who insist on collecting sales tax are probably pocketing it). Many kitchen cabinet companies, for instance, won't charge tax at all if they install the cabinets. Others will say that is not permitted. Most contractors will not charge tax on the basic raw materials (drywall, lumber, etc.), but will for fixtures and appliances.

I mentioned the website -- all the official pronouncements on such things are at http://www.tax.ny.gov/ -- if I recall, there is a 10-15 page plain-language guide in addition to the forms and a number of related documents.

Nyc_sport and Uptown_joe: Thanks for your input. I will look for the plain language guide. It would be helpful if someone could develop an app for this or a spreadsheet where one could enter the various numbers and shabang.. it would tell you how much is subject to sales tax and how much is not! But then if wishes were horses, beggars would ride!

Best,
Bob.

So if a contractor says there is sales tax on the whole job he is dishonest?? The contractor the building recommended is charging tax on the whole project.

I'd strongly suggest you read this document: http://www.tax.ny.gov/pdf/publications/sales/pub862.pdf

Flarf - yikes my gut was saying liar and your link confirmed it!!!