Capital Improvement Form Instructions

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Capital improvements bring substantial value to real property. Both contractors and customers benefit when they fill out forms to obtain certificates of capital improvement. In New York state, for instance, the cost of certain materials used in capital improvements may be taxable but their installation costs aren't. Depending on the state, contractors may also be allowed to apply for refunds or obtain credit for sales taxes paid on materials. A properly filled out capital improvement form also reduces administrative issues when making capital improvements.

Things You'll Need

  • Applicable state-specific certificate of capital improvement form

Filling Out the Customer Section

  • Contact your state's taxation and finance or comparable office to obtain your certificate of capital improvement form. You may be able to download a certificate of capital improvement form from the applicable state agency's website. Some states also mail or fax certificate of capital improvement form upon request. .

  • Read the guidelines on the capital improvements form and then type in the required information. Enter the name of the customer, street address, city, state, ZIP code and certificate of authority number, if any, in the customer section.

  • Enter the description of capital improvements undertaken in the lines directly below "Describe capital improvement to be performed."

  • Enter the capital improvement's project name, street address where the work is to be performed, city, state and ZIP code.

  • Check the appropriate boxes under "I certify that." Check either "owner" or "tenant" of the real property and certify that the work described will result in a capital improvement according the guidelines stated within the form. Check if the contract "includes" or "does not include" the sale of tangible personal property to retain its identity as such when installed and that taxes will be paid on the tangible personal property if the installed property does not become a permanent part of the real property.

  • Read and agree to the statements to accept sales tax responsibility and pay penalties if the property does not quality as a capital improvement. You must also agree to pay the contractor sales tax on associated services and tangible personal property. You may be subject to civil and criminal penalties under the tax law if you issue a fraudulent or falsified certificate of capital improvement.

  • Sign the form in the "signature of customer" line or box. Enter your title and the date you signed the certificate of capital improvement form in the spaces designated for the customer.

Contractor Section

  • Read the statements to certify that you have entered into a contract to perform capital improvement work described by the customer. You must also certify that you understand and agree to collect tax and be personally liable for penalties and interest if the certificate of capital improvement is falsified.

  • Sign the form in the "signature of contractor or officer" line or box. Enter your title and date that you completed, signed and dated the certificate of capital improvement form in the spaces designated for the contractor.

  • Make a copy of the completed certificate of capital improvement form and give the customer the copy.

  • File the original certificate of capital improvement form with the other records you're maintaining for the project.

Tips & Warnings

  • Keep all tax exemption certificates that relate to capital improvements for at least three years if you are a contractor. Maintaining good records will also help prove that you have indeed adhered to state and federal tax laws regarding capital improvements.
  • In some states, certificates of capital improvement forms cannot be used to buy building materials.
  • Based on the laws in your state, you or your contractor, or both, may have 90 days to prove the work performed resulted in a capital improvement.
  • Always read the guidelines in the certificate of capital improvements form completely before filling it out and sending it in. Contact the state agency where you obtained the form if you have any questions.

References

  • Photo Credit a_Taiga/iStock/Getty Images
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