TO THE PROPERTY OWNER: In cases where the contractor performs work which results in an exempt capital improvement to your house or land
(real property), he may NOT charge you any sales tax if you issue to him a fully completed Certificate of Exempt Capital Improvement (Form ST-8).
It is important to distinguish between an exempt capital improvement and a taxable capital improvement, repair or installation. If the fulfillment of a
contract only maintains the existing value of the property, it is a repair and not a capital improvement. Where an improvement results in an increase in the
capital value of the real property, it is generally considered that a capital improvement has been performed.
(But see below list of taxable capital improvements.)
As an aid to determine whether a contract is for a repair to real property or a capital improvement to real property, the treatment of such transaction for
income tax purposes under the Federal Internal Revenue Code may be used as a guide. If you have any doubt whether the work to be performed constitutes
a repair or an exempt capital improvement, you should communicate with the Division of Taxation and describe in detail such work.
The following are examples of exempt capital improvements:
New construction (other than taxable Porch enclosure, construction of Paneling, installation of
capital improvements listed below) New roof, installation of New heating system installation
In-ground swim pool, installation of Tiled bath, installation of Rewiring
New central air conditioner installation New bath fixtures, installation of New electrical outlets installed
Painting a newly constructed house New kitchen cabinets, installation of New siding, installation of
New hot water heater installation New kitchen fixtures, installation of Garage, construction of
Patio, construction of Paving of driveway Storm doors and windows, original
or initial installation of
The following are examples of taxable capital improvements. This form cannot be issued for these services, which are subject to sales tax on and after
October 1, 2006:
-Seeding, sodding, grass plugging of new lawns, planting trees, shrubs, hedges, plants, etc.
-Clearing and filling land associated with seeding, sodding, grass plugging of new lawns, or planting trees, shrubs, hedges, plants, etc.,
including tree/stump removal
- Installing carpeting and other flooring
- Installing a hard-wired security, burglar or fire alarm system