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Ezel / Tax Rulings / TX
TX 8801L0855B02 Sales and/or Use Tax (State,Local,MTA) 1988-01-20

Was labor to demolish a building taxable as real-property repair or remodeling, and which rules governed mixed construction and debris removal?

Short answer: Demolition labor was not taxable as real-property repair or remodeling. Rule 3.357 governed contracts combining new construction and remodeling, while Rule 3.356 separately governed garbage collection and removal.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
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 a taxpayer-specific January 1988 Texas Comptroller letter applying real-property and garbage-removal rules then in effect. It says the opinion may change if the facts differ. The letter holds only that demolition labor is not taxable as repair or remodeling; it points to a separate garbage-removal rule without stating the tax result for a particular debris-removal charge. Demolition, mixed construction, remodeling, garbage-removal, and real-property rules may have changed; verify current law. STAR documents may no longer represent current policy even when not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
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) is the authoritative source for any reliance.

Plain-English summary

The Comptroller said labor to demolish a building was not taxable as a real-property repair or remodeling service.

For contracts combining new construction and remodeling, the letter directed the contractor to Rule 3.357(b)(3) and (c)(3). It separately directed garbage collection and removal work to Rule 3.356 without deciding a specific removal charge in the body.

What this means for you

The historical letter separated demolition labor from debris-removal service and from mixed new-construction/remodeling contracts. Those components could follow different rules.

Common questions

Was demolition labor taxable as repair or remodeling? No.

Did the letter say debris removal was also nontaxable? No. It referred removal work to Rule 3.356.

Citations and references

  • 34 Tex. Admin. Code Rule 3.357(b)(3), (c)(3) — historical mixed new-construction and remodeling provisions.
  • 34 Tex. Admin. Code Rule 3.356 — historical garbage collection and removal rule.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller January 20, 1988

Dear ***:

On behalf of Mr. Bullock, I hope you'll accept my apology for the delay
in answering your question involving changes in the sales tax law. This isn't
the way we normally do business.

Our people were, and still are, swamped by a deluge of inquiries as they
attempted to interpret provisions of the new law and draft rules which would
not adversely impact businesses. In many instances, an answer to a question
just wasn't available when the question arrived.

Sections (b)(3) and (c)(3) of Rule 3.357 on real property repair and
remodeling explain your responsibilities when you perform a contract that
involves both new construction and remodeling.

As to your question concerning demolition work, the labor involved in
demolishing a building is not taxable as a real property repair and remodeling
service.

Rule 3.356 on real property services explains the sales tax
responsibilities of persons who perform garbage collection and removal
services.

I am also enclosing the tax bulletins on real property repair and
remodeling and garbage collection services for your information.

This opinion is based upon the facts you presented. If there are
additional or different facts, this opinion may change.

Please feel free to contact me if you have additional questions. You may
write me, call toll free 1-800-531-5441 from anywhere in Texas or phone
512/463-4600.

Sincerely,
Mona Ezell Shoemate
Tax Policy Division

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