Are floating docks and their connecting ramps a capital improvement, so their sale and installation are exempt from New York sales tax?

Plain-English summary

James H. Rambo, Inc. builds floating docks, custom-designed for each site based on the vessel's length and draft, the water depth at low tide, tidal range, number of boats, and water width. The floating docks connect to a main dock by a ramp and rise and fall with the tide. Owners consider them permanent -- they raise property value and are factored into tax assessments -- but they are also frequently removed and stored on land before winter storms to prevent damage, a labor-intensive process using a work barge, heavy equipment, and a crew, and are then reattached afterward. Rambo asked whether these floating docks and ramps qualify as capital improvements, which would make their sale and installation exempt from sales tax.

The Department said no. It reiterated that classification as "real property" under the Real Property Tax Law doesn't automatically make something a capital improvement under the sales tax law (citing Broadway Mobile Homes); all three parts of the capital-improvement test -- value/useful-life increase, permanent affixation causing material damage on removal, and intent to be permanent -- must be met. Relying on a 1983 precedent involving a showboat restaurant secured to steel pilings (found not permanently affixed enough to qualify), the Department found that Rambo's floating docks and ramps aren't affixed to the shore or lake/river bottom with any real permanency: the connection to the realty must stay minimal so the dock can rise and fall freely with the tide, the docks themselves are designed to be moved and stored on land seasonally, and the ramps are detachable from the main dock. Because they retain their character as tangible personal property rather than becoming part of the real property, the floating docks and ramps don't qualify as capital improvements, and their sale and installation remain subject to sales tax.

What this means for you

Dock builders and marine construction contractors

Even a dock or ramp system that a property owner and tax assessor treat as adding permanent value to the property can still be taxable tangible personal property for sales tax purposes if its physical design requires it to be removable (to move with tides, or for seasonal storage). Charge sales tax on your floating dock and ramp installations unless the specific structure is truly fixed in place with no design intent for removal.

Waterfront property owners

Don't assume a floating dock system is exempt just because it increases your property's assessed value or feels permanent day-to-day. The sales tax test looks at physical affixation and design intent, not market value or property-tax treatment.

Accountants and tax professionals

This is a useful counterpoint within this corpus's capital-improvement line of rulings: compare it against the same-session custom-locker ruling (TSB-A-98(61)S), where permanent affixation with material damage on removal DID satisfy the capital-improvement test. The line-drawing factor here is the intentional, functional need for removability (tidal movement, seasonal storage) -- a useful contrast for any marine or seasonal-structure installation question.

Common questions

Q: Are floating docks always taxable in New York?
A: Under this fact pattern, yes -- because they must move with the tide and are designed to be removed seasonally, they don't meet the permanent-affixation requirement for a capital improvement.

Q: Does it matter that the dock increases the property's assessed value?
A: Not for sales tax purposes. Real-property tax treatment and capital-improvement status under sales tax law are separate questions; classification under one doesn't control the other.

Q: What would make a dock or similar marine structure a capital improvement?
A: It would need to be permanently affixed to the real property so that removal would cause material damage, with no design intent for removal -- unlike the minimal, deliberately flexible connection floating docks require.

Q: Can another dock builder rely on this ruling directly?
A: Not automatically. This advisory opinion binds the Department only as to the petitioner and the specific facts (tidal movement, seasonal removability) described.

Citations and references

Statutes and rules:

• Tax Law § 1101(b)(9)(i) (definition of capital improvement)
• Tax Law § 1105(c)(3) (tax on installing tangible personal property, except capital improvements)
• Matter of Broadway Mobile Homes Sales Corp. v. State Tax Commission, 67 AD2d 1029
• Showboat Restaurant, Inc., Dec St Tx Comm, May 6, 1983, TSB-H-83(135)S

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/sales_ao_1998.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/sales/a98_60s.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-98(60)S
Sales Tax
September 9, 1998

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. S980601A

On, June 1, 1998, the Department of Taxation and Finance received a
Petition for Advisory Opinion from James H. Rambo, Inc., 229 Bishops Lane,
Southampton, New York 11968.
The issue raised by Petitioner, James H. Rambo Inc., is whether floating
docks and ramps are considered to be capital improvements.
Petitioner submits the following facts as the basis for this Advisory
Opinion.
Petitioner constructs floating docks which are connected to the main dock
by a ramp.
The floating docks move vertically as the tides change.
Site
specific permits are required by state, local and federal regulatory agencies for
the floating docks.
Each floating dock is designed specifically for a particular site, based
on the following factors:
a. Length and draft of vessel
b. Depth of the water at mean low tide
c. Extent of tidal interchange (range of tide, change in feet)
d. Number of boats to be moored
e. Width of water at site
The owners of these structures consider them permanent in that they
increase the market value of their property. The tax assessors consider them
when assessing the properties (they add considerable value to the property).
They are not interchangeable without considerable changes in the structures.
(Again, all docks are site specific only).
There are occasions when certain floating docks are removed from the water,
usually during the winter season, when winter storms are imminent. Petitioner
will remove the floating dock from the fixed piles or ramp and store the dock
upland in a safe environment.
This is a time consuming procedure and
necessitates the use of heavy equipment, a work barge, and a crew of workmen.
On occasion, when the docks are not placed in protective storage, they sustain
considerable damage or they completely break loose and float away (usually also
after considerable damage has been done). The ramps may be removed as well.
After the storms, or winter season, the floating docks are then reattached to the
ramps, catwalks or whatever design was approved by regulatory agencies.

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TSB-A-98(60)S
Sales Tax
September 9, 1998

Applicable Law
Section 1101(b)(9)(i) of the Tax Law defines capital improvement as:
An addition or alteration to real property which:
(A) Substantially adds to the value of the real property, or
appreciably prolongs the useful life of the real property; and
(B) Becomes part of the real property or is permanently affixed to
the real property so that removal would cause material damage to the
real property or article itself; and
(C) Is intended to become a permanent installation.
Section 1105 of the Tax Law provides, in part:
On and after June first, nineteen hundred seventy-one, there
is hereby imposed and there shall be paid a tax of four percent
upon:
*
*
*
(c) The receipts from every sale, except for resale, of the
following services:
*

*

*

(3) Installing tangible personal property, excluding a mobile home,
or maintaining, servicing or repairing tangible personal property,
including a mobile home, not held for sale in the regular course of
business, whether or not the services are performed directly or by
means of coin-operated equipment or by any other means, and whether
or not any tangible personal property is transferred in conjunction
therewith, except:
*

*

*

(iii) for installing property which, when installed, will
constitute an addition or capital improvement to real property,
property or land, as the terms real property, property or land are
defined in the real property tax law as such term capital
improvement is defined in paragraph nine of subdivision (b) of
section eleven hundred one of this chapter....
Opinion
Although certain property may be classified as real property under Section
102 (12)(b) of the Real Property Tax Law, this is not determinative of the status
of that property under Article 28 of the Tax Law. (Matter of Broadway Mobile
Homes Sales Corp. v. State Tax Commission, 67 AD2d 1029) In determining whether
or not an installation qualifies as a capital improvement, all three conditions
of Section 1101(b)(9)(i) of the Tax Law must be met, including that the

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TSB-A-98(60)S
Sales Tax
September 9, 1998

installation becomes part of the real property or is permanently affixed to the
real property.
Showboat Restaurant, Inc., Dec St Tx Comm, May 6, 1983,
TSB-H-83(135)S held that a showboat secured to steel pilings was not affixed to
real property with the degree of permanency required to constitute a capital
improvement within the meaning and intent of Section 1105(c)(3) of the Tax Law.
Petitioner’s floating docks and ramps are not affixed to the shore or
bottom with any permanency. In fact, the connection of the floating docks to the
realty must be minimal in order to rise and fall with the tide. In addition, the
floating docks themselves are designed to be movable so that in the winter or
periods of adverse weather they can be placed on land or in a protected area.
The ramps also are detachable from the main dock. Consequently, the floating
docks and ramps sold and installed by Petitioner retain their identity as
tangible personal property and do not qualify as a capital improvement. The sale
and installation of the floating docks and ramps, therefore, are subject to sales
tax.

DATED:

September 9, 1998

NOTE:

/s/
John W. Bartlett
Deputy Director
Technical Services Bureau

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