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2006 NJSSA Sales Tax
Talking Points:
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Self storage is the rental of commercial
real property, divided into conveniently sized spaces that ordinary
folks find useful. Self Storage is an extension of the family
home/apartment, the neighborhood business and even community
organizations. The vast
majority of our occupants are located in the densely populated urban and
suburban areas where home space is not available or available only at
premium cost.
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New Jersey Courts (and Courts
in most states) have held that self storage is the leasing of commercial
real property. See: N.J.S.A.
2A:44-188 for definition of “Self-service storage
facility”. A
self-service storage facility is not a warehouse as used in Chap. 7 of
Title 12A of the N.J.S.
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In New Jersey, self storage occupants are
divided as follows: approximately 79% of occupants use self storage for
household purposes; 17% for commercial purposes; 2% students; and 2%
military.
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A sales tax of 7% would be
passed through to occupants intact and would increase unit rentals by
7%. This adds an unexpected,
additional cost for folks to store their personal belongings safely and
securely when they don’t have the room at home (the majority of
occupants).
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This sales tax will devastate
self storage properties bordering on neighboring states; PA currently has
a sales tax and thus NJ’s competitive advantage will be destroyed;
NY and MD do not have sales tax on self storage and thus NJ will now be
competitively disadvantaged.
In addition, sales tax will negatively affect the valuation of all
self storage properties in New
Jersey.
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Self Storage owners currently
pay high property taxes as many localities now assess self storage
property using the income and expense approach. This plan would add sales tax to
the property tax and is the first time that sales tax would be applied to
commercial real property in New
Jersey.
ü
In most areas, Self Storage
developers took non-productive land and created value by building
facilities which are non-intrusive uses, do not generate traffic or noise
and are environmentally benign.
Self storage facilities increase the attractiveness of the project
area and make good neighbors.
ü
To make a violent change in the
tax law and suddenly apply sales tax to commercial real estate
transactions, increasing the cost to New Jersey residents for storing their
personal belongings is contrary to established law, not sound public policy and may be
unconstitutional.
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