Is a home-inspection report bought by a prospective buyer a taxable information service, or a service to real property?

Plain-English summary

Joseph A. Matocha asked whether charges for home inspection services are subject to sales and use tax. In the situation described, a prospective buyer of a residence hires an inspector to examine the building and its contents and provide a written report of deficiencies. The inspector does no repair work, and the report is given only to the client, who uses it to decide on price adjustments or needed repairs before buying.

The Department held the charge is not taxable.

• A home-inspection report is an information service. Collecting data from an inspection and analysis of the premises and furnishing a written report is an information service under Tax Law § 1105(c)(1).
• But it fits the personal/individual exclusion. Section 1105(c)(1) excludes information that is personal or individual in nature and not (or not able to be) substantially incorporated in reports furnished to others (see also 20 NYCRR § 527.3(b)(2)). The report pertains only to the particular premises the client is buying, is furnished only to the client, and has value for a very limited time — meeting both conditions. The Department compared it to forage-testing reports (Converse, TSB-A-81(12)S), concrete-sample reports (Fortunato Sons, TSB-A-86(30)S), power-mower reports (Garden Way, TSB-A-89(22)S), and the automobile-damage appraisals in the regulation's Example 2, all of which qualify.
• Not a service to real property either. So long as the buyer is not the owner of the property inspected, the charge is not a taxable service of maintaining, servicing, or repairing real property under § 1105(c)(5).

What this means for you

One-client, one-property reports are usually nontaxable information

The information-service exclusion turns on whether the report is unique to your client and not resold or pooled. A home-inspection report prepared about a single property for a single buyer, and given only to that buyer, squarely fits the exclusion — so the fee isn't taxable.

The buyer-vs-owner distinction matters

The Department flagged that this analysis assumes the person paying for the inspection is a prospective buyer, not the current owner. An inspection bought by the property's owner could raise a different question under § 1105(c)(5) (servicing real property), so watch who your client is.

Don't confuse "no tax" with "no records"

The charge is exempt because of what the report is — personal, individual, non-repurposable information. If your reports were instead built from a shared database or sold to multiple parties, the answer could flip. Keep your work genuinely client-specific.

Common questions

Q: Do we charge sales tax on a home-inspection report for a buyer?
A: No. It's a personal, individual information service excluded from tax under § 1105(c)(1), because the report is about one property and goes only to that client.

Q: Isn't inspecting a building a taxable service to real property?
A: No, as long as the client is a prospective buyer and not the owner — then § 1105(c)(5) doesn't apply.

Q: What if we sold the same findings to several parties or drew on a shared database?
A: That could lose the exclusion. The exclusion depends on the information being personal, individual, and not substantially incorporated in reports furnished to others.

Citations and references

Statutes and regulations:

• Tax Law § 1105(c)(1) — tax on information services; exclusion for personal or individual information not substantially incorporated in reports furnished to others
• Tax Law § 1105(c)(5) — tax on maintaining, servicing or repairing real property
• 20 NYCRR § 527.3(b)(2) — regulatory statement of the personal/individual exclusion (Example 2: auto-damage appraisals)

Cited authority:

• David J. Converse, Advisory Op St Tax Comm, August 4, 1981, TSB-A-81(12)S — forage-testing reports
• Fortunato Sons Inc., Advisory Op St Tax Comm, July 28, 1986, TSB-A-86(30)S — concrete-sample testing reports
• Garden Way Incorporated, Advisory Op Comm T & F, July 25, 1989, TSB-A-89(22)S — power-mower testing reports

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1990.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a90_12s.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-90 (12)S
Sales Tax
March 21, 1990

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
DEPARTMENT OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S891031A

On October 31, 1989 a Petition for Advisory Opinion was received from Joseph A. Matocha,
21 Aviation Road, Albany, New York 12205.
The issue raised by the Petitioner, Joseph A. Matocha, is whether charges paid for "home
inspection services" are subject to sales and use tax.
A person or business is hired by a potential purchaser of a residential building to inspect the
building and contents being sold and to report on any deficiencies noted. The inspector provides his
client, the prospective purchaser, with a written report of deficiencies in the building. No repair
services are performed by the inspector. The written report is provided only to the client. The
purchaser of the inspection service generally relies on the inspection report to decide if further price
adjustments are necessary before purchase of the residence or if repair of the deficiencies is
necessary.
Section 1105(c) of the Tax Law imposes a tax on the receipts from every sale, except for
resale, of the following services:
(1)
The furnishing of information by printed, mimeographed or multi­
graphed matter or by duplicating written or printed matter in any other manner,
including the services of collecting, compiling or analyzing information of any kind
or nature and furnishing reports thereof to other persons, but excluding the furnishing
of information which is personal or individual in nature and which is not or may not
be substantially incorporated in reports furnished to other persons.... (Emphasis
added).
Regulation Section 527.3(b)(2) further explains Section 1105(c)(1) of the Tax Law as
follows:
The sales tax does not apply to the receipts from the sale of information
which is personal or individual in nature and which is not or may not be substantially
incorporated into reports furnished to other persons by the person who has collected,
compiled or analyzed such information....
Example 2:

Automobile insurance damage appraisals
performed for insurance companies are
individual reports, the fees for which are not
subject to sales tax....

Furthermore, forage testing reports (David J. Converse, Advisory Op St Tax Comm, August
4, 1981, TSB-A-81(12)S); concrete sample testing reports (Fortunato Sons Inc., Advisory Op St Tax
Comm, July 28, 1986, TSB-A-86(30)S); and power mower testing reports (Garden Way

-2­
TSB-A-90 (12)S
Sales Tax
March 21, 1990

Incorporated, Advisory Op Comm T & F, July 25, 1989, TSB-A-89(22)S) have all been determined
to meet the exclusionary requirements of Section 1105(c)(1) of the Tax Law.
Since the report prepared by the inspection service represents a collection of data derived
from an inspection and analysis of the premises being purchased by the client, the sale of such report
in written form constitutes the rendering of an information service within the meaning and intent of
Section 1105(c)(1) of the Tax Law.
Because the report pertains only to the particular premises being purchased by the particular
client, the report is considered to be uniquely personal or individual in nature, thus satisfying the first
condition required for exclusion from taxation pursuant to Section 1105(c)(1) of the Tax Law.
The second condition for exclusion mandates that the information may not be substantially
incorporated in reports furnished to other persons. The report furnished to the client meets this
condition in that the data and analysis contained in the report is furnished only to the client, is not
furnished to other persons and has value for a very limited period of time.
Therefore, as the report furnished to the client meets the criteria required under the
exclusionary clause of Section 1105(c)(1) of the Tax Law, as further illustrated by the section of the
Regulations and the opinions cited above, such report constitutes a non-taxable information service.
Accordingly, the amount of the charge for the home inspection report is considered to be a
receipt from the sale of a non-taxable information service and is not subject to state or local sales tax.
It is further noted that as long as the purchaser of the home inspection service is not the
owner of the real property which is the subject of the home inspection report, the charge paid by the
purchaser for the report will not be subject to sales tax pursuant to Section 1105(c)(5) of the Tax
Law as a charge for maintaining, servicing or repairing real property, property or land.

DATED: March 21, 1990

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

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