Is renting a self-storage unit that you lock and control yourself subject to New York's sales tax on storage services?

Plain-English summary

A tenant rented a self-storage unit in New York City, month to month. The tenant kept it locked with a heavy-duty padlock, had 24-hour access, was responsible for cleaning it out on move-out, and the facility operator could enter only in an emergency or on default. The operator supplied lighting and an elevator but no security, cleaning, or help moving property. The tenant asked whether the rental charges were hit by New York's sales tax on storage services (§ 1105(c)(4)).

The answer: no — this is a nontaxable lease of real property, not a taxable storage service.

• § 1105(c)(4) taxes the service of storing tangible personal property and the rental of safe deposit boxes or similar space. But 20 NYCRR 527.6(b)(2) says the tax does not reach a lease of real property for storage.
• The regulation and TSB-M-86(3)S set out a test for a real-property lease: the tenant contracts for a specific amount of space in a specific location, has unlimited/exclusive control of access, and may supply their own racks and facilities.
• Exclusive possession can be shown by a lock whose key is solely the tenant's (or, if the operator holds a key, a lease saying the operator has no right of access except to collect rent, make repairs, or in emergencies). Limited landlord access for those purposes doesn't defeat exclusivity (citing Feder v. Caliguira and Layton v. Namm & Sons).
• Here the tenant had a specific unit, its own lock, 24-hour access, and full control, and never relinquished the stored property to the operator — so the charges are nontaxable rent for real property.

What this means for you

"Self-storage" isn't automatically taxable — the terms of the deal decide. New York draws a line between renting space (real property, not taxed) and buying a storage service (taxed). If you rent a defined unit, put your own lock on it, control access, and the operator can only enter for emergencies, repairs, or rent collection, you're leasing real property and the charge isn't subject to § 1105(c)(4).

The facts that matter: a specific unit in a specific place; your exclusive possession and control (your key/lock); access on par with comparable commercial rentals; and the operator not taking custody of your goods. Full-service arrangements where the operator handles and controls your property look more like a taxable storage service.

Operators: your lease terms drive the tax result. Structuring agreements to give tenants exclusive possession (their own lock, limited landlord entry) supports non-taxable treatment; providing handling/custodial services pushes toward taxable storage.

Common questions

Q: Is renting a mini-storage unit subject to New York sales tax?
A: Not if it's a lease of real property — a specific unit, your own lock, exclusive control, and access comparable to other commercial rentals, with the operator unable to enter except for emergencies, repairs, or rent. Then § 1105(c)(4) doesn't apply.

Q: What if the operator holds a master key?
A: You can still have exclusive possession if the written lease says the operator has no right of access except to collect rent, make necessary repairs, or in emergencies.

Q: When would self-storage be taxable?
A: When it's really a storage service — the operator takes custody of or handles your property, rather than renting you a space you exclusively control.

Citations and references

Statutes, regulations, and guidance:

• Tax Law § 1105(c)(4) — taxes the service of storing tangible personal property and the rental of safe deposit boxes or similar space
• 20 NYCRR 527.6(b)(2) — the tax applies to storage service, not to a lease of real property for storage
• TSB-M-86(3)S — Taxable Status of the Rental of Self-Service Mini Storage Units (three-part real-property-lease test)

Cases cited: Feder v. Caliguira, 8 NY2d 400 (1960); Layton v. Namm & Sons, 275 AD 246 (1949).

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_2010.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a10_17s.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-10(17)S
Sales Tax
April 26, 2010

Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S100125B

Name and address redacted asks whether the charges it pays for the rental of a self-storage unit
are subject to the sales tax imposed on storage under the provisions of section 1105(c)(4)of the Tax Law.
We conclude that Petitioner’s rental of a self storage unit constitutes a rental of real property, the
consideration for which is not subject to sales tax.
Facts
Petitioner rented a specific self storage unit located in a self storage facility in the city of
New York on a month to month basis. The charges for the rental of the unit are based on the size of the
unit, which the facility operator leases in various advertised standard sizes (e.g., closet-64 cubic ft, double
closet-160 cubic ft, tall closet-112 cubic ft, etc.). Petitioner was responsible for keeping the storage space
locked with a heavy duty padlock, and the facility operator could enter the storage space only in an
emergency or in the event of default of the agreement. Upon termination of its agreement, Petitioner is
responsible for removal of any of its property and to broom clean the premises. Petitioner’s agreement
with the facility owner provides that the owner will supply lighting on the floor on which the storage
space is located and elevator service, but that it will not supply security, water, toilets, electricity,
cleaning, rubbish removal, assistance in moving the occupant’s personal property or any other service or
utilities. Petitioner, upon presentation of proper identification, is allowed access to the storage unit during
the posted hours of the facility’s operation excluding access on certain legal holidays. At the present
time, the posted hours of operation for the particular facility are 24 hours a day, 365 days a year.
Analysis
Section 1105(c)(4) imposes sales tax on the receipts from the service of storing tangible personal
property not held for sale in the regular course of business and the rental of safe deposit boxes or similar
space.
Regulations section 527.6(b)(2) provides:
While the tax is imposed on the service of providing storage space, it is not imposed on
the lease of real property for storage. A lease can be distinguished from the provision of storage
space, in that under a lease, the tenant contracts for a certain amount of footage in a specific
location, the tenant has unlimited control of access to the space, and may supply his own racks,
cabinets and other physical facilities.
TSB-M-86(3)S – Taxable Status of the Rental of Self-Service Mini Storage Units provides, in part:
Thus, the rental of a self-service storage room is exempt from sales tax if it constitutes
the rental of real property for storage but taxable if it is the service of providing storage space.

TSB-A-10(17)S
Sales Tax
April 26, 2010

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The regulations set forth three tests to identify a lease of real property for storage. First, the
tenant must contract for a certain amount of footage in a specific location.
Secondly, the regulations provide that to qualify as a lease of real property the tenant
must have unlimited control of access to the space. This test is merely a restatement of the long
established rule of law that it is the transfer of absolute control and possession of property at an
agreed rental which differentiates a lease from other arrangements dealing with property rights.
Feder v. Caliguira, 8 NY2d 400 (1960). Accordingly, it necessarily follows that a lease involves
a possession exclusive even of that of the landlord. Layton v. Namm & Sons, 275 AD 246(1949).
Thus, to be exempt, it is essential that the lessor relinquish all control of the space rented. The
lessee's possession and control of the space must be to the complete exclusion of the lessor.
The lessee's exclusive possession of the space may be established by means of a lock
(either lessor's or lessee's) on the door of the enclosed space if the key for the lock is solely under
the control of the lessee and is not available to the lessor. As an alternative, if the lessor possesses
either a duplicate or master key and thereby has access to the space, exclusive possession may
nevertheless be found if a written lease agreement specifically provides that the lessor has no
right of access to the space during the term of the rental except for purposes of collecting rent,
making necessary repairs and in emergency situations.
Additionally, while "unlimited control" has traditionally been contemplated in terms of
around the clock access to the property by the lessee, we recognize that this must be viewed in
light of prevailing commercial practices. Today, many types of commercial rentals are not open
around the clock. For example, commercial offices rented in large office buildings are often not
open to their tenants during all hours. Accordingly, "unlimited control" of the tenant may still be
found if the space is accessible to the tenant during hours when other similar commercial rentals
are generally accessible to their tenants.
Furthermore, it has long been recognized that limited access by a landlord in order to
collect rent, to make necessary repairs or in emergency situations will not be construed as
negating the tenant's exclusive possession of the space. Layton v. Namm & Sons, supra. Any such
provision in a lease agreement will not disqualify an otherwise qualifying agreement.
*

*

*

To the extent that a lessor provides services to a lessee, either himself or through an
agent, such as unloading vehicles or handling or transporting the goods to be stored, whether or
not for an additional fee, the owner of the goods will not be considered to have relinquished
possession and control of the stored goods as long as the owner of the goods or his agent is
present during the rendering of such services and directs the actions of the individuals performing
such services.
Petitioner has leased a designated storage unit in a mini-storage facility. Petitioner has exclusive
possession of its rented space, 24 hour access, and is responsible for the maintenance of its leased
property. Petitioner does not relinquish possession and control of the property to be stored to the facility
operator. Rather, it is Petitioner who places property in and removes property from its storage unit at
will. The facility operator does not have possession or control of the stored property, nor does it have
any responsibility to Petitioner for the safekeeping and return of the stored property. As provided in the
Tax Department’s TSB-M-86(3)S with respect to rentals of space in mini-storage facilities, the receipts

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TSB-A-10(17)S
Sales Tax
April 26, 2010

paid by Petitioner to the facility operator constitute nontaxable receipts from the rental of real property
and are not receipts subject to sales tax imposed on sales of the service of storing tangible personal
property under section 1105(c)(4) of the Tax Law.

DATED: April 26, 2010

NOTE:

/S/
Jonathan Pessen
Director of Advisory Opinions
Office of Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited to
the facts set forth therein and is binding on the Department only with respect to
the person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is issued
or for the specific time period at issue in the Opinion.