Other than a security deposit, the largest outlay most Executive Office Centers will have is for the purchase of furniture and telephone equipment. And, if you have to pay sales tax on these purchases, that can add an additional 1-10%, depending on what State/County, your Center is located.
The question came up recently, “Do I have to pay sales tax on equipment I rent out to my tenants?”
Most States in The USA have a resale certificate that a purchaser can give to the seller of equipment. By giving the resale certificate to the seller, this will allow you to avoid paying sales tax on the purchase…but you are not reselling the equipment, so is this accurate?
It has come to this CPAs attention that some States include in the definition of “Resale”, the rental of the furniture and equipment, and thus you may be able to avoid the sales tax on your largest purchases.
As with all tax questions, you should contact your CPA to see if this large savings is applicable in your State, or you can simply contact our office.
Have a great month.
Roy F. Glassberg, CPA
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