Is construction-site cleanup (rough cleanup and final house cleaning) taxable in Texas, and does it matter whether the building is a new residence?

Plain-English summary

A company providing real property services for general construction companies — performing both "rough cleanup" (picking up debris from a construction jobsite) and "final cleanup" (cleaning inside the house) for new construction and for repair/remodeling jobs — asked the Comptroller about its Texas sales tax obligations.

The Comptroller confirmed that a charge for real property services, including construction site cleanup, is generally subject to Texas sales tax, and the company must collect it unless it receives a properly completed Texas sales tax exemption certificate. There's one specific carve-out: the company is NOT required to collect tax when cleaning new residential structures — single-family dwellings, apartment complexes, condominium complexes, and nursing homes — for a homebuilder or developer, but only if that homebuilder or developer provides a properly completed exemption certificate stating the services are purchased in connection with building a new residence. Cleaning nonresidential structures (whether new or existing) or existing residential structures remains fully taxable, with no available exemption.

What this means for you

Construction cleanup and jobsite debris-removal companies

Your rough and final cleanup charges are taxable real property services by default. Collect tax unless your customer gives you a valid exemption certificate — and that certificate is only available for cleaning brand-new residential construction for a homebuilder/developer, never for existing homes or any commercial/nonresidential building.

Homebuilders and developers

If you want your cleanup vendor to skip charging sales tax on cleaning a new home or apartment/condo project, you need to give them a properly completed exemption certificate specifically stating the purchase is in connection with building a new residence.

Accountants and tax professionals

The new-residential-construction exemption is narrow: it covers only NEW residential structures for a homebuilder/developer, requires an exemption certificate to actually apply, and does not extend to remodeling, repair, or any nonresidential cleanup work.

Common questions

Q: Is construction site cleanup taxable in Texas?
A: Yes, as a real property service, unless the customer provides a valid exemption certificate.

Q: When is cleanup exempt?
A: Only when cleaning new residential structures (single-family homes, apartments, condos, nursing homes) for a homebuilder or developer, and only with a properly completed exemption certificate.

Q: Is cleaning an existing home taxable?
A: Yes — the exemption applies only to new residential construction, not existing residential structures.

Q: Is cleaning a commercial or nonresidential building taxable?
A: Yes, whether the building is new or existing.

Q: Can other cleanup companies rely on this exact letter?
A: No. This is a Texas STAR letter ruling binding on the Comptroller only for the taxpayer it addresses (34 Tex. Admin. Code Rules 3.1, 3.10); confirm your own facts with a tax professional.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200009722L

Original ruling text

September 21, 2000

Dear **:

Thank you for your recent fax regarding your business and Texas sales tax.

You stated that your company provides real property services for general
construction companies. Your company performs site cleanup for new
construction and repair and remodeling of improvements to realty.

A charge for real property services, including construction site cleanup,
is subject to Texas sales tax. You must collect Texas sales tax unless you
receive a properly completed Texas sales tax exemption certificate.

Your company is not required to collect Texas sales tax when cleaning new
residential structures (e.g., single family dwellings, apartment complexes,
condominium complexes and nursing homes) for a homebuilder or developer. The
homebuilder or developer must provide your company with a properly completed
Texas sales tax exemption certificate stating that they are purchasing your
services in conjunction with building a new residence.

Your company is, however, required to collect Texas sales tax when cleaning
nonresidential structures (new or existing) or existing residential structures.

This opinion is based on the facts presented. Additional or different facts
may yield different results.

You may call me toll free 1-800-531-5441, extension 5-9787, if you have any
questions or need more information. The direct line is 512/305-9787. You may
also write to Tax Policy Division, Comptroller of Public Accounts.

Sincerely,

Philip Knisely
Tax Policy Division