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This Ruling has been obsoleted by AN 94(4)

Ruling 90-45



Whether the construction activities of the X Company on certain property constitute "new construction" so that the services rendered are not subject to the sales and use tax pursuant to Section 12-407(2)(i)(I) of the Connecticut General Statutes and Section 12-426-26(c) of the Regulations of Connecticut State Agencies.


The building at issue dates back to the 1830's and is essentially a four-story structure onto which several one-story additions have been built over the years. Two sides of the structure are exposed to the public. The sides of the building which are not exposed to the public vary in height from one to four floors. Additionally, the back side contains an open area (which was called the courtyard), the side walls of which also vary in height. While the preference would be to level the building and construct an entirely new one, the local historical society has required the owners to retain the brick facade of two external walls due to its historical significance.

As a result, engineering plans have been created for the construction of the new building in a unique manner. The construction plan calls for the new building to be built from the top floor down to the first floor. Concrete footings will be set in the old basement. There will not be a basement in the new building as the old basement will be filled and capped with a concrete slab. A series of steel columns will be erected to the top floor from the concrete footings. After internally bracing the existing floors, concrete is poured on top of the top floor. When it is set, the wooden flooring structure and bearing walls underneath are removed. This process is then continued for each floor of the structure down to the first floor. During construction the brick facade is reanchored to the new concrete and steel structure.

The result of this construction work is that the old structure of varying heights is replaced by a new four-story building. There will be all new building material internally.


The construction activities described herein constitute new construction because there is an entirely new building internally, including new floors, support columns and walls with only the exterior brick facade left in place. As such, the services to industrial, commercial and income producing property are not subject to sales and use tax pursuant 12-407(2)(i)(I) of the Connecticut General Statutes and Section 12-426-26(c) of the Regulation of Connecticut State Agencies. The addition of new square footage outside the existing shell of the building also constitutes new construction and, accordingly, is treated in the same manner.

James F. Meehan

April 27, 1990