N.J. Admin. Code § 18:24-5.6

Current through Register Vol. 56, No. 8, April 15, 2024

Section 18:24-5.6 - Contractor's tangible personal property installation services

(a) Treatment of installation services that do not result in a capital improvement are as follows:

1. Charges for services rendered by a contractor for installing tangible personal property, which, when installed, will not result in a capital improvement to real property, are subject to tax.

(b) Treatment of installation services that result in capital improvements are as follows:

1. Charges for the following types of services are taxable even though they result in a capital improvement:

i. Landscaping services;

ii. Installation of floor covering; and

iii. Installation of alarm or security systems;

2. Charges for landscaping, floor covering installation, and alarm system installation charges that result in capital improvements are taxable to the party who contracts with the contractor performing the service, which may be the property owner or the prime contractor; and

3. Charges for installation services that result in capital improvements, except the services listed in (b)1 above, are exempt from sales tax.

(c) The factors used to determine whether services result in a capital improvement are as follows:

1. In determining whether an installation of tangible personal property results in a capital improvement depend upon if:

i. The improvement results in an increase in the value of the real property; and

ii. The improvement results in a significant increase in the useful life of the real property; and

2. A determination of whether services result in a capital improvement for sales tax purposes does not depend upon the characterization of the work for local property tax purposes.

N.J. Admin. Code § 18:24-5.6

Amended by 48 N.J.R. 824(a), effective 5/16/2016