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Additional information for contractors and repair persons

If you are a contractor or repair person, whether you collect sales tax from a customer depends on whether the work you perform is a capital improvement to real property, or is repair, maintenance, or installation work.

Capital improvements

A capital improvement is any addition or alteration to real property that meets all three of the following conditions:

  • It substantially adds to the value of the real property, or appreciably prolongs the useful life of the real property.
  • It becomes part of the real property or is permanently affixed to the real property so that removal would cause material damage to the property or article itself.
  • It is intended to become a permanent installation. 

When you perform work that qualifies as a capital improvement to real property, you should not charge your customer sales tax. See Tax Bulletin Capital Improvements (TB ST-104).

Repair, maintenance, and installation services

When you perform work that qualifies as repair, maintenance, or installation work, you must charge your customer sales tax. These services cover all activities that relate to keeping real property in a condition of fitness, efficiency, readiness, or safety, or restoring it to such condition. See Tax Bulletin Contractors - Repair, Maintenance, and Installation Services to Real Property (TB-ST-129).


You must register for sales tax if you:

  • make taxable sales, or
  • perform taxable services, or
  • want to issue certain exemption documents, such as Form ST-120.1, Contractor Exempt Purchase Certificate.

You are not required to register for sales tax if you only perform capital improvement work. See Tax Bulletins Do I need to Register for Sales Tax? (TB-ST-175) and How to Register for New York State Sales Tax (TB-ST-360).

Purchasing materials and supplies

Materials and other tangible personal property purchased for a project are taxable, whether purchased by a contractor, subcontractor, or the property owner, unless the property owner is entitled to an exemption. However, in certain circumstances, a contractor or subcontractor can make a purchase without paying sales tax using Form ST-120.1.


If you are a contractor or a subcontractor and you hire a subcontractor to perform taxable work as part of a project, you can use Form ST-120.1 to purchase the subcontractor’s services for resale.

Tax-exempt customers

If a customer is eligible for an exemption from sales tax, you do not need to charge sales tax as long as you receive a properly completed exemption certificate or other appropriate documentation. See Tax Bulletin Contractors - Repair, Maintenance, and Installation Services to Real Property (TB-ST-129).