In areas that experience below freezing temperatures it is essential to prevent flooding and mold…
Is Mold Remediation a taxable service?
Eradicator Mold Remediation prides itself in providing a service that is sincere. We attempt to explain all steps in the mold remediation process and highlight what you should expect on completion of our services. A subject that has risen a few times from clients is the question “Is Mold remediation taxable within New Jersey?” It seems that this question has caused conflicting responses as some competitors have deemed this service nontaxable. The answer to this question may seem confusing at times but is determined by a few factors. To assist with such scenarios the state of New Jersey provided several questions that highlight these scenarios with the correct answers. These questions and answers (#12 – #15) will help determine if the service to your property warrants sales tax.
Mold Inspection Services are exempt from Sales tax
Mold inspection services such as mold testing and visual inspections that are used to determine the presence of mold as well as provide estimates for remediation are considered nontaxable.
My basement flooded. I hired a company to perform mold detection services on my home. Is this service subject to tax? Answer- No. Charges for mold inspection or detection services are not subject to sales tax.
Mold Remediation that doesn’t provide Capital Improvement:
Mold Remediation that doesn’t provide Capital Improvement (remove affected items without replacing e.g., drywall) is subject to sales tax. Eradicator suggests that if a mold remediation company suggests that the mold removal service is nontaxable (when it is) to be aware of their intentions. The likely conclusion is that if the mold company is suggesting not paying sales tax, then there is a good possibility, they may not be reporting their income to the state and are willing to provide unscrupulous workmanship. More importantly the remediation of your property may be written off as a necessary upkeep to your investment therefore as a property owner there is no benefit in not paying taxes for this service.
The first floor of my home was flooded and now requires mold removal. Are mold removal services subject to tax? 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.
Mold Remediation that provides Capital Improvement:
Mold remediation that removes and replace the affected items is not subject to sales tax. Once your property is restored and upgraded this is seen as a capital improvement and is exempt from New Jersey sales tax. An example of this is removing the affected items then replacing these building materials with a new wall, gutters, and/or sidings. A Certificate of Exemption should be provided to the mold contractor so that sales tax is not charged, and a record of proof is available for all parties involved. The Certificate of Exempt Capital Improvement may be downloaded from the State of New Jersey Department of Treasury.
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? 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.
Eradicator will always go above and beyond to ensure that our clients are extremely satisfied with the service provided without compromising our ethics. We will also ensure that we uphold our standards and be examples of what to expect from a reputable mold remediation company. If there are additional questions regarding this topic feel free to Contact Us or review the State of New Jersey guidelines for mold as a taxable service.