Rev. 9/17

Sales Tax and Home Improvements

Tax Topic Bulletin S&U-2

Introduction

When you have work done on your real property (building or land), this work can be a

capital improvement, a repair, or maintenance service. Sales Tax rules differ for each type of

work done to your real property. This bulletin explains the Sales Tax rules that apply in each

case.

This document is designed to provide guidance to taxpayers and is accurate as of the date

(or end user) of these items. Some examples of persons who are considered contractors for

paper hangers, roofers, masons, and landscapers.

The term

also includes those who manufacture, sell, and install items that become

part of real property (e.g., manufacturers and sellers of kitchen cabinets and vanities who

also install those items). Such contractors are known as

The work performed by a contractor can be a capital improvement, a repair, or a

maintenance service. Contractors working in New Jersey are required to be registered with

and/or buildings in such a way that its removal would result in substantial damage to the

real property.

mass and can be touched (e.g., furniture, automobiles, tools, appliances).

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are items purchased by a contractor that will become part of the

real property. For example, a 2×4 used as a stud will become part of the wall and is

considered construction material.

means an installation of tangible personal property that increases the

include:

All new construction*

Porch enclosure

New heating system

New kitchen cabinets

New electrical outlets

New kitchen fixtures

Paving driveway

New gutters

New fence

Electronic garage door opener

New elevators

Barbecue pit

New hot water heater

In-ground swimming pool

Underground water sprinkler system

include:

Planting shrubbery, trees, hedges, plants, etc.

Seeding, sodding, grass plugging of new lawn

Clearing and filling land associated with seeding, sodding, etc. of new lawn or planting

shrubbery, trees, etc., including tree and/or stump removal

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include:

Fixing loose bath tiles

Repairing gutters

Patching driveway potholes

Mowing lawns

Snow shoveling

for labor. The contractor charges Sales Tax on the labor portion of the bill only when he/she

performs a taxable capital improvement, repair, maintenance, or installation service. (There is

charge for labor, you are required to pay the Sales Tax on the total amount of the bill.

Certain service providers that work on, but do not

, real property (e.g., janitorial or

cleaning services, pest control services) are not considered to be “contractors” for New

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Repairs or services to tangible personal property (e.g., washing machines, television sets,

not a “contractor” for New Jersey Sales Tax purposes because the work is not being done to

the land or buildings of others. The repairperson is required to charge you Sales Tax on both

the labor and the parts used for the repair.

The contractor may not charge you Sales Tax for either parts or labor when maintaining,

servicing, or repairing a residential heating system unit if the heating system serves no more

than three families who live independently of each other and do their own cooking on the

premises.

When you work on real property yourself, you are required to pay Sales Tax on the materials

and supplies that you purchase.

purchasing construction materials from a supplier,

whether a contractor or property owner, must pay Sales Tax, regardless of the nature of the

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the floor covering and the installation charge.

For more information on floor covering dealers and New Jersey Sales Tax, see publication

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