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Ezel / Tax Rulings / TX
TX 8801L0862G13 Sales and/or Use Tax (State,Local,MTA) 1988-01-25

When were flooring materials and labor taxable for residential work, commercial new construction, and replacement in existing buildings?

Short answer: Residential and commercial new-construction installation labor was nontaxable while materials were taxable. Repair or remodeling of nonresidential real property was taxable on the total charge, and the letter taxed both materials and labor for replacement floor coverings in an existing building.

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 a nonresidential repair-and-remodeling change effective January 1, 1988. It says the opinion may change if the facts differ and cites an enclosed rule without giving its number. The letter first exempts residential installation labor, then states that replacing floor coverings in an 'existing building' makes materials and labor taxable; this page preserves both statements and does not expand the latter beyond its apparent nonresidential context. Flooring, contractor, residential-property, new-construction, repair, and remodeling 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 STAR documents may no longer represent current policy even when not marked superseded.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

Beginning January 1, 1988, repair or remodeling of nonresidential real property was taxable on the total charge, whether the contract was lump-sum or separately stated.

Labor remained nontaxable for building new structures, completing unfinished structures, adding new footage, and building, repairing, or remodeling residential structures.

For floor coverings specifically:

  • installation in new or existing residences carried nontaxable labor but taxable materials;
  • installation during initial construction of a commercial building carried nontaxable labor but taxable materials; and
  • replacement in an existing building carried tax on both materials and labor.

What this means for you

The historical result distinguished residential work and commercial new construction from nonresidential repair or remodeling. The wording about replacement in an existing building should be read with that broader context.

Common questions

Was residential flooring-installation labor taxable? No.

Were the materials taxable? Yes.

Was labor taxable during initial commercial construction? No.

What about replacement flooring in an existing building? The letter taxed both materials and labor.

Citations and references

The letter cites no numbered statute or rule; it says an enclosed real-property repair and remodeling rule supplied more detail.

Source

Original ruling text

January 25, 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.

Effective January 1, 1988, if you repair or remodel nonresidential real
property, you would have to collect sales tax on the total charge whether
the services were provided in a lump-sum or separated contract. Sales
tax
is not due on your labor charges if you build new structures, complete
unfinished structures, add new footage to existing structures or build,
repair or remodel residential structures.

If you install floor covering in new or existing residences, your labor
is
not taxable. Sales tax is due on the materials. If you install floor
covering as part of the initial construction of a commercial building,
the
labor is not taxable. Sales tax is due on the materials. If you replace
floor coverings in an existing building, sales tax is due on both the
charge
for materials and labor.

I am enclosing a copy of the new Rule and bulletin on real property
repair
and remodeling which provide more detailed information.

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

If you have any questions or need more information, please call me at
1-800-531-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at Telephone Bank Operations.

Sincerely,
Dorothy Van Dokkumburg
Telephone Bank Operations

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