|The following is a brief discription of how sales tax and building permits work in the state
of New Jersey in regards to kitchen renovations.|
In general, any type of home improvement deemed to be a "capital improvement" is exempt from sales
tax on the labor portion of the job. Kitchen renovations would be deemed a capital improvement if
they include new cabinets or countertops. Thus, if you (the owner of the house) fill out a New
Jersey ST-8 Form and give it to us you will not have
to pay sales tax on any part of the job, even if we separate the materials cost from
the labor cost on the invoice. This is because for capital improvements, New Jersey requires
that we pay the sales tax on the materials when we buy them, not when we sell them.
If, however, you decide that you want to do the job yourself or use your own contractor and will
only be buying the cabinets from us, then you will have to pay sales tax on the cabinets.
Click here, http://www.state.nj.us/treasury/taxation/pdf/pubs/sales/su2.pdf,
for a pdf document explaining in further
detail how Sales Tax on Home Impovements works within the state of New Jersey.
Click here, http://www.state.nj.us/treasury/taxation/pdf/other_forms/sales/st8.pdf,
to download a pdf copy of Form ST-8.
Unlike Sales Tax, building permit requirements vary with every city in New Jersey. A building permit
can be obtained by either the owner of the house or the contractor. Building permits typically
cost less than $100 for a kitchen renovation and, if required, must be obtained no matter
who does the work (even if you do it yourself). A building permit simply lets the city know what
you are doing to your house. Depending on the type of work done, the city may also send an
inspector to review the work and make sure it was done to code.
Also, if the work increases the value of your house (as a kitchen renovation typically
does) the city can reasses your property
value and raise your property taxes. A building permit does
not protect you in any way against an unscrupulous contractor and should not be confused with a
contractor's license (which also does not provide you any protection). In New Jersey,
carpenters generally do not need a contractor's license, however, if any plumbing or electical work is being
done, then a certified plumber or electrician is necessary for that aspect of the job. Remember,
in NJ, only a certified
plumber or electrician or the homeowner can work on water or electrical lines. A friend, relative,
or the "handyman" you know cannot, even if you are looking over their shoulder while they work. They
can, however, do general carpentry work, such as putting up kitchen cabinets.
In New Jersey, in general, you need a building permit anytime a project will change water,
electrical or gas lines or alter the interior or exterior of the home. General repair and
maintenance work (like painting) does not need a building permit. Kitchen renovations generally
require a building permit. If you are just
resurfacing your cabinets or only changing a few of them you may not need a permit.
To be sure, you need to check with your city. Remember, just because the project is being
done inside your
house and your neighbors will not be able to see any work being done is not a valid reason to
forgo obtaining a building permit or using a certified plumber or electrian if necessary.