N.Y. Comp. Codes R. & Regs. tit. 20 § 528.16

Current through Register Vol. 46, No. 50, December 11, 2024

Section 528.16 - Tangible personal property sold to contractors for use in erecting structures of tax exempt organizations

Tax Law, § 1115(a)(15)

(a)Exemption.

(1) Tangible personal property sold to a contractor, subcontractor or repairman for use in erecting a structure or building of an organization described in Part 529 of this Title, is exempt when it is to become an integral component part of such structure or building.

Example 1:

An exempt organization contracts to have a building erected on its land. Purchases by its contractor of tangible personal property, such as nails, sheetrock and plywood that become part of the structure, are exempt.

Example 2:

A contractor who builds a structure on speculation and subsequently sells the structure to an exempt organization is not entitled to the exemption.

Example 3:

The owner of real property enters into a contract to erect a building to be leased, under a long-term lease, to an exempt organization. The contractor's purchases are not exempt as the owner of the building is not an exempt organization.

Example 4:

A contractor owns land on which he erects a building to the specifications of an exempt organization. Under the terms of the contract, the organization will not own the land or the building until it is completed and ready for occupancy. The contractor's purchases are not exempt as the exempt organization will not own the building until it is completed.

Example 5:

Lumber and other materials that are used to build forms are not exempt since they do not become a component part of the structure.

Example 6:

Equipment rentals such as cranes, bulldozers, backhoes, etc. for use in building a structure for an exempt organization are subject to tax.

(2) Tangible personal property sold to a contractor, subcontractor or repairman for use in adding to, altering or improving real property, property or land owned by an organization described in Part 529 of this Title is exempt when it becomes an integral component part of the structure, building or real property.

(b)Form of contract.

(1) The form of contract entered into between an exempt organization and its contractor is not relevant.

(2) Purchases of tangible personal property by subcontractors and repairmen are accorded the same treatment as purchases by contractors.

Example:

A building is being erected for an exempt organization. Glass in the windows has been broken, and a glazier has been engaged by the general contractor to repair the windows. The charges for such repairs are exempt, and the purchase of new glass is exempt.

Cross-references:

Definition of real property, see section 527.7(a)(2) of this Title; contractors see Part 541 of this Title.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 528.16