Deductions & credits

You can deduct the sales tax (in the year they were paid) on a home renovation or construction if all of these conditions apply:

• You're itemizing.
• You're taking the sales tax deduction, as opposed to the state/local income tax deduction.
• The tax rate is equal to your state's general sales tax rate.
• You (or your contractor acting as your agent) purchased the building materials and paid the tax.

Related Information:

• How do you define "major purchase" or "major item" for the sales tax deduction?      

1. A home (including a mobile home or prefabricated home) or substantial addition to or major renovation of a home, but only if the tax rate was the same as the general sales tax rate and any of the following applies.
• Your state or locality imposes a general sales tax directly on the sale of a home or on the cost of a substantial addition or major renovation.
• You purchased the materials to build a home or substantial addition or to perform a major renovation and paid the sales tax directly.
• Under your state law, your contractor is considered your agent in the construction of the home or substantial addition or the performance of a major renovation. The contract must state that the contractor is authorized to act in your name and must follow your directions on construction decisions. In this case, you will be considered to have purchased any items subject to a sales tax and to have paid the sales tax directly.    They are deductible in the year they were paid.   If he has not purchased them yet, you don't know how much tax is imposed.    There is no deduction for the deposit you paid.   When the contractor pays the tax, you can claim it.    @el1668 @el1668