In the State of New Jersey, the service of maintaining, servicing and repairing real property is generally subject to sales tax. However, services relating to capital improvement, meaning the service improves the capital value of real property or significantly increases the useful life of a property, are typically exempt.
New Jersey was hard hit by Superstorm Sandy in October 2012. Countless properties were damaged and destroyed, triggering a lengthy clean-up period and a flood of questions from taxpayers about the taxability of property repair and the like. In response, the New Jersey Department of Taxation has published FAQs from Property Owners, which explains taxable and exempt services.
Taxable services
Goods and services subject to New Jersey sales tax include but are not limited to:
- Cleaning services (of carpet, furniture, personal items).
- Debris removal services.
- Installation services (of shingles, floor covering, etc,) to repair real property.
- Labor charges to repair real property.
- Materials and supplies used to repair property.
- Mold removal services and mold remediation services.
- Pressure washing services.
- Removal of water and sand from real property.
- Repainting the exterior or interior of a structure.
- The purchase of a portable generator to be permanently affixed to property.
- Household goods.
- Vehicles.
Exempt services
Services exempt from New Jersey sales tax include but are not limited to:
- Demolition services.
- Tree stump removal (unless performed in conjunction with landscaping services).
- New construction (ie, building a new garage to replace a destroyed garage).
- The installation of a new roof.
- Mold inspection or detection services.
- Removal and replacement of walls and insulation.
- The initial painting or staining of a structure.
- The installation of a portable generator to be permanently affixed to the property.
- Home lifting services.
For a capital improvement exemption to be valid, the owner of the property must provide the contractor with a properly completed Certificate of Exempt Capital Improvement (Form ST-8).
Building new structures and repairing damaged structures is stressful enough without worrying about sales tax. Businesses should focus on the projects, not sales tax. Learn how automated sales tax software works.
photo credit: U. S. Fish and Wildlife Service - Northeast Region via photopin cc
