Did replacing an old building's entire internal structure count as new construction when two historic exterior brick facades remained?

Note -- obsolete historical guidance. DRS marks this ruling "not current" and states that it was obsoleted by Announcement (AN) 94(4).

Plain-English summary

An 1830s building had a four-story core, several one-story additions, uneven rear and side heights, and an open courtyard. The owners wanted to demolish it, but a local historical society required them to preserve the brick facades of two exterior walls.

The engineering plan built the replacement from the top floor downward. New footings and steel columns supported new concrete floors while the old wooden floors and bearing walls were removed. The old basement was filled and capped, and the preserved brick facades were reanchored to the new concrete-and-steel structure.

DRS ruled that this was new construction, not taxable renovation work under the historical rule. The finished project was a new four-story building with new floors, support columns, walls, and internal materials; only the exterior brick facade remained. New square footage added outside the existing shell received the same treatment.

What this means for you

The historical classification turned on the project replacing essentially the entire building structure despite facade preservation. AN 94(4) later obsoleted the ruling, so it does not establish the current boundary between renovation and new construction.

Common questions

Did retaining the historic facade make the project a renovation? No. DRS focused on the entirely new internal building.

What parts were new? Floors, support columns, walls, internal materials, and the four-story structural system.

How was added square footage treated? As new construction under the same historical rule.

Citations and references

• Conn. Gen. Stat. § 12-407(2)(i)(I).
• Conn. Agencies Regs. § 12-426-26(c).
• Announcement (AN) 94(4) -- identified by DRS as obsoleting this ruling.

Source

• Landing page: Connecticut DRS Rulings
• Ruling: Ruling 90-45

Original ruling text

Ruling 90-45, Renovation

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

Ruling 90-45

Renovation

This Ruling has been obsoleted by   AN 94(4)

ISSUE PRESENTED:

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.

FACTS

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.

RULING

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

Commissioner

April 27, 1990