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Ezel / Tax Rulings / CT
CT Ruling 89-263 Sales and Use Taxes 1989-12-07

Was the first finish-out of two never-finished, never-occupied floors taxable as renovation work?

Short answer: No under this historical ruling. The first finish-out of floors never finished or occupied was nontaxable new construction. But any prior use of the unfinished space, including storage other than building materials, made the later finish-out taxable renovation work.

Apply this to your situation

This page answers the general question as of 1989. Ezel answers yours, under current Connecticut tax law, with citations.

Currency note: this ruling is from 1989
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official 1989 Connecticut Department of Revenue Services Ruling applying the construction-service rules then in effect to the initial finish-out of two floors. Its new-construction result depended on the space never having been finished, occupied, or used before the work; even storage other than building materials changed the stated result. The ruling does not state that it remains current. Connecticut imposes sales and use tax solely at the state level: there are no local or municipal sales taxes. This summary is informational only and is not legal or tax advice. Consult a licensed Connecticut tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page as a PDF) is the authoritative source for any reliance.
View original ruling (PDF)

Plain-English summary

DRS addressed the first finish-out, or fit-out, of two floors that had never been finished or occupied. It ruled that the work was not subject to sales and use tax because it was considered new construction under the historical provision.

The answer changed if the unfinished portion had been used before the work. Any prior use -- including storage other than building materials -- made the finish-out taxable as a renovation.

What this means for you

Under the historical ruling, the space's use history controlled the classification. A truly unfinished and unused floor qualified as new construction; prior occupancy or other use converted the later fit-out into taxable renovation work.

Common questions

Was the first fit-out taxable? No, if the floors had never been finished or occupied.

Could the unfinished area be used for storage first? Only storage of building materials was carved out. Other storage made the later finish-out taxable as renovation.

Did the ruling address later remodeling? No. It addressed initial fit-out work and the effect of prior use.

Citations and references

  • Conn. Gen. Stat. § 12-407(2)(i)(I), as amended by 1989 Conn. Pub. Acts 251.

Source

Original ruling text

Ruling 89-263, Renovation

The initial finish out work or fit out work provided to the two floors that have never been finished or occupied is not subject to sales and use tax because it is considered to be new construction pursuant to section 12-407(2)(i)(I) of the Connecticut General Statutes, as amended by Public Act No. 89-251. However, if any use, e.g., storage (other than building materials) is made of the unfinished portion of the building prior to the initial fit out work being performed, then the finish out work would be taxable as a renovation to the building.

LEGAL DIVISION

December 7, 1989

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