the rules say you must buy the materials and therefore directly pay the sales tax. if you pay a contractor, you don't get the deduction. the deduction for all taxes (except the foreign tax credit if you deduct it rather than taking the credit is limited to $10K and you have to choose between state income tax and sales tax. from what I understand, if you buy the materials directly, you don't get the contractor's pricing so you could end up spending more than the tax benefit you receive.
