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Sales and Use Tax
Frequently Asked Questions
Taxability of Purchases of Tangible Personal Property and Services Associated with Disaster Recovery Efforts


The New Jersey Sales and Use Tax Act imposes a tax of 7% upon the receipts from every retail sale of tangible personal property, unless the sale is exempted/excluded under the Act. Generally, the maintaining, servicing, or repairing of real property is taxable unless the service results in an exempt capital improvement. A repair service is a service which maintains the existing value of property. A maintenance service is a service which preserves the existing condition of property. A capital improvement is an installation of tangible personal property which results in an increase of the capital value of real property or a significant increase in the useful life of property. If a service results in an exempt capital improvement, the property owner must provide the contractor with a fully completed Certificate of Exempt Capital Improvement (Form ST-8) to claim the exemption.

After Superstorm Sandy the Division received many inquiries regarding the taxability of sales of tangible personal property and services sold in connection with disaster recovery efforts. The Division compiled this list of frequently asked questions posed by property owners and contractors to address some of the sales and use tax concerns regarding the purchase of tangible personal property and services associated with disaster recovery.

Frequently Asked Questions from Property Owners:
  1. My detached garage was damaged beyond repair and I hired a contractor to demolish the remaining structure. Are the charges for this service subject to tax?
  2. Answer-No. Charges for demolition services are not subject to tax.

  3. I hired a contractor to remove debris such as fallen branches from my property. Are the charges for this service subject to tax?
  4. Answer-Yes. Debris removal services are servicing or maintaining real property and as such the charges are subject to tax.

  5. A tree fell in my backyard and I hired a tree removal company to remove the remaining tree stump and roots. Is this service subject to tax?
  6. Answer- No. Charges for the removal of a tree stump and roots are not subject to tax, unless performed in conjunction with landscaping services. Landscaping services include the clearing of land associated with landscape improvements such as the seeding, sodding, grass plugging of new lawns, planting trees, shrubs, hedges, plants, etc. For additional information on landscaping services see publication ANJ-4, Landscapers & New Jersey Sales Tax.

  7. My garage was destroyed and I hired a contractor to rebuild it. Are the charges to rebuild my garage subject to tax?
  8. Answer- No. The construction of a garage is an exempt capital improvement and as such the charges are not subject to tax. The property owner must issue the contractor a fully completed Certificate of Exempt Capital Improvement (Form ST-8) to document this exemption.

  9. My deck was damaged by a surge of sand and water and an entirely new deck must be built. I purchased the necessary materials and supplies myself. Is the purchase of these materials and supplies subject to tax?
  10. Answer- Yes. The purchase of materials and supplies is subject to tax. This is true regardless of whether the property owner or contractor purchases or makes use of the materials and/or supplies.

  11. Portions of my roof were damaged during the storm and now require replacement shingles. Is the installation of replacement shingles subject to tax?
  12. Answer- Yes. Installation of replacement shingles is repairing real property and as such the charges are subject to tax.

  13. My roof was severely damaged and now requires the installation of a new roof. Is the installation of a new roof subject to tax?
  14. Answer- No. The installation of a new roof is an exempt capital improvement and as such the charges are not subject to tax. The property owner must issue the contractor a fully completed Certificate of Exempt Capital Improvement (Form ST-8) to document this exemption.

  15. My carpet was soiled. Is the charge for cleaning my carpet subject to tax?
  16. Answer- Yes. Charges for carpet cleaning services are subject to tax.

  17. The flooring throughout my home was damaged and must now be replaced. Is the installation of new carpet and tile subject to tax?
  18. Answer- Yes. Charges for the installation of floor covering are subject to tax. For additional information on the installation of floor covering see publication ANJ-5 Floor Covering Dealers & New Jersey Sales Tax.

  19. I hired a contractor to remove water and sand from the first floor of my home. Is this service subject to tax?
  20. Answer- Yes. The removal of water and sand from real property are servicing and maintaining real property and as such the charges are subject to tax. For additional information see Technical Advisory Memorandum TAM-2012-3 Charges for Water Damage Restoration Services.

  21. I hired a contractor to clean various furniture and decorative items in my home damaged by water and sand. Are these cleaning services subject to tax?
  22. Answer- Yes. The cleaning of various household goods such as furniture, decorative items, and personal items are maintaining or servicing tangible personal property and as such, the charges are subject to tax. For additional information see Technical Advisory Memorandum TAM-2012-3 Charges for Water Damage Restoration Services.

  23. My basement flooded. I hired a company to perform mold detection services on my home. Is this service subject to tax?
  24. Answer- No. Charges for mold inspection or detection services are not subject to sales tax.

  25. The first floor of my home was flooded and now requires mold removal. Are mold removal services subject to tax?
  26. Answer- Yes. Mold removal services (e.g., spraying of walls to treat mold) are repairing or servicing real property and as such the charges are subject to tax.

  27. Due to the prolonged presence of water in my home I had to “gut” an area of my home to the studs. I hired a mold remediation company to treat and scrub the exposed frame. Is this service subject to tax?
  28. Answer- Yes. Mold remediation services are servicing of real property and as such the charges are subject to tax.

  29. The first floor of my home was flooded. I hired a contractor to remove and subsequently replace all the walls and insulation due to the presence of mold. Is this service subject to tax?
  30. Answer- No. The removal and replacement of all the walls and insulation is an exempt capital improvement. The property owner must issue the contractor a fully completed Certificate of Exempt Capital Improvement (Form ST-8) to document the exemption.

  31. My back deck was washed away. I built a new deck on my home and plan to hire a contractor to stain the deck. Is this service subject to tax?
  32. Answer- No. The initial painting or staining of a structure is an exempt capital improvement. The property owner must issue the contractor a fully completed Certificate of Exempt Capital Improvement (Form ST-8) to document the exemption.

  33. The exterior of my home needs to be painted. Is this service subject to tax?
  34. Answer- Yes. Repainting the exterior of a structure such as a house is servicing or maintaining real property and as such the charges are subject to tax.

  35. The exterior of my home requires pressure washing. Is this service subject to tax?
  36. Answer- Yes. Pressure washing the exterior of a home is the servicing and maintaining of real property and as such the charges are subject to tax.

  37. I purchased a portable generator because my home lost power. Is the purchase of this generator subject to tax?
  38. Answer- Yes. The purchase of a portable generator is subject tax.

  39. I ordered a generator from a hardware/appliance retailer to be permanently installed on my property. Is my purchase of this generator subject to tax?
  40. Answer- Yes. The purchase of a generator is subject to tax.

  41. I hired a contractor to permanently install a generator on my property. Are the installation charges by the contractor subject to tax?

  42. Answer- No. The installation of a generator which will be permanently affixed to the property is an exempt capital improvement. The property owner must issue the contractor a fully completed Certificate of Exempt Capital Improvement (Form ST-8) to document the exemption.

  43. Recent changes in disaster relief insurance policies require me to lift my home to a certain elevation. I hired a contractor to lift my home. Is the charge associated with lifting my home subject to tax?
  44. Answer- No. Lifting a home is an exempt capital improvement. The property owner must issue the contractor a fully completed Certificate of Exempt Capital Improvement (Form ST-8) to document this exemption.

  45. Many of my household items were damaged beyond repair. I received a reimbursement from my insurance company, but the reimbursement does not include any amounts paid for sales tax. Is the purchase of replacement household goods subject to sales tax?
  46. Answer- Yes. The purchase of household goods is subject to tax.

  47. My car was “totaled” by the flood. I received funds from the insurance company to buy a new car. Is the purchase of the new vehicle subject to tax?
  48. Answer- Yes. The purchase of a vehicle is subject to tax.

    Frequently Asked Questions from Contractors:

  49. I was hired to construct a new detached garage on a homeowner’s property. Do I charge the property owner sales tax for the materials and supplies associated with this service?
  50. Answer- No. As the contractor you are the end-user of any materials and supplies purchased for the job and should pay tax on all materials and supplies. When you build a detached garage you should not charge the customer sales tax on the cost of materials and supplies used for the job. For additional information see tax topic bulletins S&U-2 Sales Tax and Home Improvements and S&U-3 Contractors and New Jersey Taxes.

  51. I was hired to repair a broken glass pane in the window of a home. Do I charge sales tax on the labor associated with this service?
  52. Answer- Yes. Labor charges for repair services to real property are subject to tax.

  53. I was hired to perform services on real property which requires the rental of a front-end loader. Do I pay sales tax for the rental of the equipment?
  54. Answer- Yes. The purchase, lease, or rental of equipment by a contractor is subject to tax.

  55. I was hired to lift a house which requires the rental of a crane with an operator. Do I pay sales tax for the rental of the crane with an operator?
  56. Answer- No. The rental of a crane with an operator to lift a house is not subject to tax. For more information on the rental of equipment with an operator see Notice Rental of Equipment with an Operator

  57. I am a contractor performing work in an area affected by the storm and have been staying at the same hotel for more than 90 days. Is my hotel stay subject to tax?
  58. Answer- No. The rental of a room by a person who has occupied the room for at least 90 consecutive days is not subject to sales tax. However, unless an upfront agreement exists between the hotel and the occupant, the hotel must collect the tax until the occupancy reaches 90 consecutive days. After 90 consecutive days, the hotel is no longer required to collect the tax and the occupant is entitled to a refund of the sales tax already collected. If the hotel does not refund the sales tax, you may apply for a refund directly to the Division using Form A-3730.

  59. I am a contractor improving, altering, and/or repairing the real property of a qualified exempt organization which holds a valid Exempt Organization Certificate (Form ST-5). Are the purchases of my materials and supplies subject to tax?

    Answer- No. The law allows for an exemption from tax on the purchase of materials and supplies for the exclusive use in fulfilling a contract with an exempt organization. In order to document the sales tax exemption, you must obtain a copy of the qualified exempt organization’s Form ST-5 and issue Contractor’s Exempt Purchase Certificate (Form ST-13) to the supplier when making purchases of materials and supplies.

For additional information on purchases by contractors fulfilling contracts with exempt organizations see Technical Bulletin-67 Contractor Exemption for Improving, Altering, or Repairing the Real Property of Qualified Exempt Entities.

Additional Information

For additional information see tax topic bulletins S&U-2 Sales Tax and Home Improvements and S&U-3 Contractors and New Jersey Taxes.


Last Updated: Wednesday, 08/20/14



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