Despite Tuesday's storm, DRS employees are answering emails and phone calls, and completing other essential agency functions. If you have a question about state taxes administered by DRS, email (drs@po.state.ct.us) or call us (860-297-5962) during regular business hours. Phone wait times are minimal.

Walk-in services at all DRS branch office locations remain suspended.

Email the Priority One Taxpayer Assistance Program: DRSPriorityOne_CollectionsAssist@po.state.ct.us.

Please check our Frequently Asked Questions page.

This information is not current and is being provided for reference purposes only

LSN 91

Special Notice - Sales and Use Taxes on Renovation of Existing Buildings and Structures

This LSN is superseded in part by SN 92(23)Obsoleted in part by AN 94(4)


As of July 1, 1989, the services involved in renovating commercial, industrial or income-producing buildings or structures are subject to sales and use taxes. Formerly, these services were not subject to tax as long as the renovation costs were capitalized for federal income tax purposes by the property owner.

Services involved in renovating buildings or structures include electrical, plumbing, painting, carpentry, roofing, siding, plastering, heating, cooling, pointing and demolition services. Services involved in renovating buildings or structures do not include janitorial, maintenance or landscaping services, which are now taxable whether or not the property is commercial, industrial or income-producing.

Renovation means the making of permanent improvements or betterments to increase the value of, and appreciably prolong the life of, an existing building or structure.

Renovation of an existing building or structure is to be contrasted with the expansion of an existing building or structure by the addition of new square footage, which expansion is new construction.

Services involved in the construction of new buildings or structures or new additions to existing buildings or structures continue to be exempt from tax.

If a contract to render services involves both renovating of an existing building or structure and the construction of an addition to that existing building or structure, the charge for services is subject to tax in its entirety, unless that portion of the charge attributable to new construction is separately stated on the contractor's bill or invoice to the property owner. Adequate records must be maintained by the contractor to substantiate that the portion of the charge attributable to renovation has not been understated.

If a contract to render services involved in renovating commercial, industrial or income-producing buildings or structures is entered into before July 1, 1989, that portion of the charge for services provided after that date is subject to tax; however, payments received after that date attributable to services provided before that date are not subject to tax, as long as the contractor's bill or invoice to the property owner expressly indicates that the services were provided before July 1, 1989.

A person rendering services involved in renovating commercial, industrial or income-producing buildings or structures continues to be regarded as a consumer of the materials and supplies used in completing renovation contracts and as a retailer of services. Tax must be separately stated on the renovation contractor's bill or invoice to the property owner and must be imposed on that portion of the charge attributable to services, but not on that portion attributable to materials and supplies (on which tax has previously been paid by the renovation contractor). Adequate records must be maintained by the renovation contractor to substantiate that the portion of the charge attributable to services has not been understated.

The charge for services involved in renovating the common areas owned by condominium associations continue to be regarded as a charge for services rendered to income-producing real property to the same extent and in the same ratio that the number of condominium units leased and not owner-occupied bears to the total number of units.

Services involved in renovating buildings or structures owned by the United States government, the State of Connecticut or its agencies, Connecticut municipalities or their agencies, or a charitable or religious organization issued an exemption permit by the Department of Revenue Services continue to be exempt from tax as long as a Governmental Agency Exemption Certificate or a Charitable or Religious Organization Exemption Certificate, as the case may be, is properly completed and issued by the property owner to the renovation contractor. Materials physically incorporated into or becoming a permanent part of a building or structure being renovated can be purchased tax-free by the renovation contractor as long as a Contractor's Exempt Purchase Certificate is properly completed and issued by the renovation contractor to the vendor of the materials.

A renovation contractor may still issue a resale certificate to subcontractors covering their services as long as those services are completed by the subcontractors and are not altered by the contractor. Tax would then be imposed on the total service charge made by the renovation contractor to the property owner.


LSN-91