Can we deduct the sales tax we paid to have our home built?

[mike the wino]

We are in the process of building a new home on property we own. We are taking the sales tax deduction for our regular purchases that the TurboTax Easy Guide allows us...in other words we are not entering our receipts manually. The program indicates that sales tax paid on certain major purchases (such as "building materials for major home improvements") is deductible, but we are paying sales tax on the entire contracted cost of construction, not just materials. Question: Is the sales tax we paid on the construction of our new home (as described above) deductible as a "Major Purchase"?

[IsabellaG · Accepted solution]

Please see the instructions to Schedule A, page A-6.

ln the instructions for Line 7, (#3), it says that you can add to the sales tax table amount:

The sales tax on 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:

a. 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.

b. You purchased the materials to build a home or substantial addition or to perform a major renovation and paid the sales tax directly.

c. 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.

[craigleemiller]

How do I find out if my state law indicates my contractor is considered my agent?