Is maintenance work on real property (like a building or elevator) taxable in Texas, or only repair and restoration work?

Plain-English summary

A taxpayer asked the Comptroller how to distinguish "maintenance" from taxable "repair" or "restoration" of an existing building under Texas's real property repair and remodeling tax. The Comptroller explains that Tex. Tax Code § 151.0047 defines "real property repair and remodeling" as a taxable service but does not define "maintenance" at all — instead, § 151.0101(b) gives the Comptroller exclusive authority to interpret what counts as taxable repair and remodeling, and the Comptroller has used that authority to carve out maintenance as nontaxable through Rule 3.357.

Under Rule 3.357(a)(3)(A-B), work only qualifies as maintenance if it is both scheduled and periodic — meaning it's planned in advance on a recurring basis to prevent future breakdowns, not performed in reaction to something that has already failed or deteriorated. The letter is explicit that scheduling a repair after something has already broken (like replacing deteriorated stone in a masonry wall) is not maintenance — it's a taxable repair. Likewise, replacing materials damaged in a storm is not maintenance (though a separate exemption applies for repairs to property damaged in a presidentially- or gubernatorially-declared disaster area).

The ruling's elevator example makes the timing distinction concrete: when an elevator starts squealing and the owner calls a repairman for a one-time fix, that visit is a taxable repair service — even though the underlying task (lubrication) is exactly the same task that would be maintenance in a different context. Only once the owner sets up a recurring, scheduled lubrication routine (e.g., every six months, based on what the repairman recommended) do the subsequent scheduled services become exempt maintenance. In other words, the same physical task can be taxable or exempt depending entirely on whether it was scheduled and periodic in advance, or performed on an as-needed basis after a problem already existed.

What this means for you

Building owners and property managers

If you want maintenance work to qualify for exempt treatment, you need a documented, recurring maintenance schedule set up in advance — not just repeated service calls placed only after something breaks. Keeping maintenance records showing the periodic schedule (as the elevator owner did in the example) supports treating those recurring services as nontaxable maintenance rather than taxable repair.

Contractors and service providers performing real property work

Whether you charge sales tax on a given job can depend on whether the customer has a pre-existing scheduled/periodic maintenance arrangement for that specific task, versus responding to an unscheduled service call after equipment has already failed or deteriorated. Rule 3.357(c)(2) allocates responsibilities between the service provider and the customer for documenting which category applies — review that subsection before deciding whether to charge tax on a given engagement.

Businesses recovering from storm or disaster damage

The letter notes that replacing storm-damaged materials is not maintenance (it's a taxable repair/restoration), but a separate exemption exists for labor to repair or restore real property damaged in an area declared a disaster by the U.S. President or the Governor of Texas. If your repair follows a declared disaster, check whether that separate exemption applies rather than trying to characterize the work as maintenance.

Common questions

Q: If I hire someone to lubricate my building's elevator every six months on a set schedule, is that taxable?
A: No. Once you establish a scheduled, periodic maintenance routine — as in the letter's example, lubrication set for every six months — the subsequent services performed under that schedule qualify as exempt maintenance under Rule 3.357(a)(3).

Q: My elevator started making noise and I called a repairman for a one-time visit — is that taxable?
A: Yes. An unscheduled service call made in response to an existing problem (noise, slower operation, etc.) is a taxable repair service, even if the fix turns out to be the same task (lubrication) that would otherwise qualify as maintenance if done on a recurring schedule.

Q: Does replacing storm-damaged materials count as maintenance?
A: No. The letter states that replacing materials damaged in a storm is not maintenance — it's taxable repair or restoration. However, a separate exemption may apply if the damage occurred in an area declared a disaster by the U.S. President or the Governor of Texas.

Q: Where is "maintenance" actually defined for Texas sales tax purposes, since the statute doesn't define it?
A: Tex. Tax Code § 151.0047 defines "real property repair and remodeling" but does not define maintenance. The Comptroller defined maintenance administratively in Rule 3.357(a)(3)(A-B), using its interpretive authority under § 151.0101(b).

Citations and references

• Tex. Tax Code § 151.0047 (defines "real property repair and remodeling")
• Tex. Tax Code § 151.0101(b) (gives the Comptroller exclusive jurisdiction to interpret real property repair and remodeling)
• 34 Tex. Admin. Code § 3.357 (Rule 3.357), specifically Subsection (a)(3)(A-B) (definitions of "scheduled" and "periodic" maintenance) and Subsection (c)(2) (service provider and customer responsibilities)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9405L1301G11

Original ruling text

May 25, 1994

Dear ****:

Thank you for your May 14, 1994, letter concerning whether
work performed on an existing building is "Maintenance",
"Repair" or "Restoration" as defined in Rule 3.357.

Texas Tax Code Sec. 151.0047 (enclosed) defines "Real
Property Repair and Remodeling." As you will notice, there
is no mention or definition of "maintenance" in the statute.
However, Texas Tax Code Sec. 151.0101(b) gives the
comptroller exclusive jurisdiction to interpret what "real
property repair and remodeling" is. It would have been easy
to define the taxable service such that no exclusion for
maintenance services existed, but that was not the intent of
the legislature. The enclosed Rule 3.357 is our
interpretation of the taxable service and defines
maintenance in Subsection (a)(3)(A-B). It is important to
note the specific definitions of "scheduled" and "periodic"
that are found in the rule. Another important Subsection is
(c)(2) because it explains the responsibilities of both the
service provider and customer.

The purpose of maintenance is to prevent more costly repairs
or restoration because of a failure, lapse or deterioration
of the operational and functioning improvement to realty.
Maintenance must be both scheduled and periodic in order
to meet the definition in Rule 57(a)(3). Scheduling the
replacement of stone in a masonry wall after it has already
deteriorated is not maintenance. The replacement of
materials damaged in a storm is also not maintenance. There
is an exemption for labor to repair or restore real property
damaged in a disaster declared a disaster area either by the
President of the United States or the Governor of Texas.

The best way to illustrate the difference between a repair
service and a maintenance service is to give an example:

Mr. Smith recently purchased a nonresidential building
with an elevator two months ago. He did not have time to
determine the maintenance needs for the building. On May
25,1994, the elevator begins to make squealing noises and
is slower in operation. Mr. Smith calls a repairman and
schedules a visit for May 27th. The repairman determines
that the elevator needs lubrication and gets the elevator to
operate smoothly again without noise. This is a taxable
repair service.

Mr. Smith now realizes that periodic, scheduled
maintenance is required to keep the elevator running
smoothly. He asks the repairman how often the elevator needs
lubrication and is told every six months. Mr. Smith
schedules in his building maintenance records a lubrication
of the elevator every six months. The subsequent lubrication
services every six months qualify as maintenance.

This opinion is based on the facts you submitted. Other
facts, though similar, may yield different results.

You may call me toll free at 1-800-53 1-5441, ext. 5-0030.
The direct line is 512/475-0030. You may also write to Tax
Administration, Comptroller of Public Accounts.

Sincerely,

David Somerville
Tax Administration Division

NOTE: Previous Accession Number 9405360L