Are furnished apartments leased to business travelers for a month or longer, with only occasional weekly maid service and no front desk, subject to New York's hotel occupancy tax?

Plain-English summary

ExecuStay Corporation provides furnished residential apartments — with furniture, a kitchen, bathroom, and bedrooms — to executives and business travelers in about 200 cities, including some in New York City. Leases run for a minimum of one month, typically one month to a year or longer, structured as a standard landlord/tenant agreement: the tenant gets a mailed key rather than checking in at a front desk, must give 15 days' written notice to vacate (30 days to extend), pays a refundable security deposit, and is responsible for smoke-detector/fire-extinguisher upkeep. If ExecuStay wants to remove a nonpaying or problem tenant, it must go through formal eviction proceedings, just like any landlord. ExecuStay offers weekly (never more frequent) maid service at no separate charge, plus telephone and cable, but tenants handle their own toiletries and laundry, there's no restaurant or food service, and no on-site staff serving tenants — some apartment buildings happen to have a doorman or valet, but that's a feature of the building, not something ExecuStay provides. Tenants can also earn Marriott Rewards points for money spent with ExecuStay.

New York's hotel occupancy tax applies to "hotels," a term the regulations extend to any building regularly kept open for lodging guests, including apartment hotels — but it doesn't automatically sweep in every furnished-apartment arrangement. The Department leaned on two prior rulings addressing similar corporate-housing models: one finding no tax where furnished apartments were leased one month to a year with only optional add-on services, and another exempting weekly-rented housekeeping units so long as no maid, food, or other common hotel services were provided.

Applying that framework, the Department found ExecuStay's setup looks like a genuine landlord/tenant relationship rather than hotel operation: month-plus lease terms, a security deposit, formal eviction procedures, no front-desk check-in, and no food service or other typical hotel amenities. Occasional weekly maid service (offered take-it-or-leave-it, with no price adjustment either way) wasn't enough by itself to convert the arrangement into a hotel. Even the Marriott Rewards points — usually associated with hotel stays — didn't change the outcome, since those points are earned the same way through unrelated transactions like credit-card spending or car rentals, not because ExecuStay itself functions as a hotel. The bottom line: ExecuStay's apartment rentals are not subject to the hotel occupancy tax.

What this means for you

Corporate housing and extended-stay apartment providers

Month-plus lease terms with real landlord/tenant formalities — security deposits, eviction procedures, no front-desk check-in — support treating your rentals as exempt real property leases rather than taxable hotel occupancy, even if you throw in occasional maid service, cable, or a loyalty program.

Property managers weighing amenities against the hotel-tax line

The presence of some hotel-like conveniences (weekly maid service, a rewards program) doesn't automatically flip a lease into a taxable hotel stay — the Department looks at the whole package, especially whether food service, daily housekeeping, and true hotel-style guest services are present.

Accountants and tax professionals

This is a useful three-ruling chain (Juliana Motel → KPMG Peat Marwick → ExecuStay) tracing how much service a furnished-unit rental can include before it crosses into taxable hotel occupancy — cite it for any extended-stay or corporate-housing client analysis.

Common questions

Q: Does offering weekly maid service automatically make a furnished-apartment rental a taxable hotel stay?
A: No — occasional (here, weekly-maximum) maid service offered without a separate charge or price adjustment wasn't enough by itself to convert this landlord/tenant arrangement into a taxable hotel occupancy.

Q: Does it matter that tenants can earn hotel loyalty points through the arrangement?
A: Not in this case — the points were earned the same way through transactions unrelated to the apartment stay (credit card use, car rentals, etc.), so they didn't signal that ExecuStay itself was operating as a hotel.

Q: What lease length or terms help support treating a furnished rental as exempt from hotel tax?
A: Genuine landlord/tenant formalities matter: here, minimum one-month terms, a security deposit, formal eviction procedures, mailed keys instead of front-desk check-in, and the absence of food service or other common hotel amenities.

Citations and references

Statutes and regulations:

• Tax Law § 1101(c)(1) (hotel definition)
• Tax Law § 1105(e) (hotel occupancy tax)
• 20 NYCRR § 527.9 (definitions; nontaxable occupancy; bungalow carve-out)

Prior rulings referenced:

• Juliana Motel, TSB-A-91(44)S
• KPMG Peat Marwick, TSB-A-91(21)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2003.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a03_15s.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Tax Policy Analysis
Technical Services Division

TSB-A-03(15)S
Sales Tax
April 4, 2003

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S010412B

On April 12, 2001, the Department of Taxation and Finance received a Petition for Advisory
Opinion from ExecuStay Corporation, 7595 Rickenbacker Drive, Gaithersburg, MD 20879.
Petitioner, ExecuStay Corporation, furnished additional information with respect to the Petition on
July 9, 2002 and August 29, 2002.
The issue raised by Petitioner is whether furnished residential apartments provided by
Petitioner are considered hotels for purposes of the sales tax on hotel occupancies.
Petitioner submits the following facts as the basis for this Advisory Opinion.
Petitioner provides furnished residential apartments to executives and other business
travelers. The apartments provided by Petitioner are located in residential apartment buildings.
They include the features found in most furnished apartments: furniture, a kitchen, a bathroom,
bedrooms, etc. The contracts with the tenant generally provide for weekly maid service. The maid
service is never performed or agreed to be performed more frequently than once a week. There is
no separate or additional charge for the maid service, and if for personal privacy reasons the tenant
does not want a maid having access to the apartment and the service is not provided there is no
reduction in the rental fee charged. While Petitioner may provide for weekly maid services in many
of its rented apartments, most of the other services normally associated with a hotel are not provided
to the tenants. For instance, the tenants are responsible for toiletries, laundry, etc. While some
apartment complexes provide a doorman, valet services, and washer and dryer units, such amenities
are not provided by Petitioner. There is no restaurant or similar food service available to tenants.
Moreover, Petitioner does not employ any individuals on the premises of these apartments to service
the tenants or the apartment units. Telephone and cable television services are provided, however,
as part of Petitioner’s standard package.
Petitioner represents that the standard customer agreement entered into with its tenants is
based on a standard landlord/tenant agreement. Tenants are required to spend at least one month
in the apartment. The term of the agreements is usually anywhere from one month to one year or
longer. The landlord mails a key to the tenants for use during the lease term. There is no front desk
on the premises where tenants may check in and check out.
The tenant is required to give Petitioner a written Notice of Intent to Vacate at least 15 days
prior to the termination of the tenancy. Similarly, in the event the tenant must extend the term
beyond the period specified in the lease, the tenant must give Petitioner a written Notice to Extend.
Petitioner requires 30 day advance notice for any extensions. Like most landlords, Petitioner
generally requires the tenant to provide a security deposit, which is fully refundable if certain terms

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Sales Tax
April 4, 2003

are met. The tenant is also subject to certain "Rental Policies and Procedures" which, among other
things, provide that the tenant is responsible for any cleaning or damages to the apartment and/or
furnishings beyond normal wear and tear, create rules for "holdover tenancies," and mandate that
the tenant is responsible for the maintenance of smoke detectors and fire extinguishers. Under the
Rental Policies and Procedures, tenants may sublet the apartments, and make alterations,
installations, repairs, or redecorations, with the written permission of Petitioner. In the event
Petitioner wants to evict a tenant for nonpayment of rent or for any other reason, it must institute
formal eviction proceedings to compel the removal of the tenant.
Petitioner’s customers may sign up as participants in the Marriott Rewards Program and
receive “points” for money spent with Petitioner. Participants receive points not only for staying
at Marriott participating hotels, but also for using a Marriot credit card, shopping at Sky Mall,
renting cars from Hertz and using their Diner’s Club card. Participants can redeem these points for
free hotel stays or vacations at more than 1,600 Marriott hotels and resorts around the world.
Petitioner provides these apartments in approximately 200 cities across the United States,
Canada and England. Some of these apartments are located in New York City.
Applicable Law and Regulations
Section 1105(e) of the Tax Law imposes sales tax on “[t]he rent for every occupancy of a
room or rooms in a hotel in this state, except that the tax shall not be imposed upon (1) a permanent
resident, or (2) where the rent is not more than at the rate of two dollars per day.”
Section 527.9 of the Sales and Use Tax Regulations provides, in part:
(a) Imposition. A sales tax is imposed on every occupancy of any room or
rooms in a hotel, motel or similar establishment at the combined statewide and local
sales tax rate in effect at the situs of such establishment, except that the tax shall not
apply to (1) the charges for occupancy by a permanent resident, or (2) where the
charge is $2 or less per day.
(b) Definitions. As used in this section, the following terms shall mean:
(1) Hotel. A building or portion of it, which is regularly used and kept open
for the lodging of guests. The term hotel includes but is not limited to an apartment
hotel, a motel, bungalow or cottage colony, boarding house or club, whether or not
meals are served.
*

*

*

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Sales Tax
April 4, 2003

(e) Nontaxable occupancy. The following occupancies are not subject to tax
on hotel occupancy:
*

*

*

(5) Bungalows. A lessor of bungalows, who rents bungalows which are
furnished living units limited to single-family occupancy, is not the operator of a
hotel. Therefore, the rents for the occupancy of such bungalows are not taxable,
provided:
(i) no maid, food or other common hotel services, such as
entertainment or planned activities, are provided by the lessor; and
(ii) the rental is for at least one week.
The furnishing of linen by the lessor with the rental of a bungalow, without
the service of changing the linen, does not alter the nontaxable status of the rental
charges.
Opinion
Juliana Motel, Adv Op Comm T&F, May 23, 1991, TSB-A-91(44)S, concluded that the
petitioner's rental of housekeeping and efficiency units for a term of at least one week was not
subject to the imposition of sales tax in accordance with Section 527.9(e)(5) of the Sales and Use
Tax Regulations, if no maid, food or other common hotel services or planned activities were
provided to the occupants.
KPMG Peat Marwick, Adv Op Comm T&F, February 13, 1991, TSB-A-91(21)S, concluded
that XYZ’s leases and subleases of furnished apartments to lessees/tenants for periods ranging from
one month to one year or longer, where tenants could subscribe to an optional package from XYZ
for light cleaning, supplies, linen and laundry, were not subject to the sales tax on hotel occupancy.
The opinion concluded that unlike hotels, motels, apartment hotels or similar establishments as
defined under Section 1101(c)(1) of the Tax Law and Section 527.9(b)(1)of the Sales and Use Tax
Regulations, XYZ did not offer lodging or occupancy to transients on a regular or daily basis, but
rather XYZ rented real property and entered into valid landlord and tenant relationships with the
lessees/tenants.
In this case, Petitioner provides furnished residential apartments to executives and other
business travelers. The apartments provided by Petitioner are located in residential apartment
buildings. They include the features found in most furnished apartments: furniture, a kitchen, a
bathroom, bedrooms, etc. Petitioner may provide for weekly maid services in many of its rented
apartments, as well as telephone and cable television services, but no other common services

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Sales Tax
April 4, 2003

associated with a hotel. The standard rental agreement entered into between Petitioner and its
tenants provides that tenants are required to spend at least one month in the apartment. The term
of the agreements is usually anywhere from one month to one year or longer. The landlord mails
a key to the tenants for use during the lease term. Tenants do not check in or out at a front desk.
Moreover, tenants are required to give Petitioner written notice at least 15 days prior to the
termination of the tenancy. Similarly, in the event the tenant must extend the term beyond the period
specified in the lease, the tenant must give Petitioner a written notice to extend the lease 30 days in
advance. Tenants are also required to provide a security deposit, which is fully refundable if certain
terms are met, and are responsible for the maintenance of smoke detectors and fire extinguishers.
Tenants may sublet their apartments, and make alterations, installations, or repairs, with written
permission from Petitioner. In the event Petitioner wants to evict a tenant for nonpayment of rent
or for any other reason, it must institute formal eviction proceedings to compel the removal of the
tenant.
In accordance with Juliana Motel, supra, and KPMG Peat Marwick, supra, the lease by
Petitioner of furnished apartments to tenants for periods ranging from one month to one year or
longer, as described herein, does not fall within the ambit of a hotel subject to sales tax under
Section 1105(e) of the Tax Law. The fact that Petitioner may provide maid service on a weekly
basis is not sufficient to consider Petitioner’s rental of apartments to be the operation of a hotel. The
provision of Marriot “reward points” to tenants for money spent with Petitioner is a benefit
frequently associated with a hotel stay. However, Marriot “reward points” are similarly awarded
persons based upon transactions completely disassociated with occupancy at a Marriot Hotel or a
tenancy with Petitioner. On balance, the information submitted by Petitioner indicates a landlord
tenant relationship with its customers. Therefore, Petitioner’s rentals of furnished apartments are
not subject to sales tax.

DATED: April 4, 2003

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Technical Services Division

The opinions expressed in Advisory Opinions are
limited to the facts set forth therein.