Contractor charged us 6.25% tax on new home in NM. Is this deductible as sales tax since he computed it on material as well as on profit and overhead too.

You can deduct the sales taxes if you paid 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.

• 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.

It would appear you meet the first test.

My concern it that in New Mexico, what is paid is a Gross Receipts tax, not a sales tax. I am trying to ascertain if the Gross Receipts tax is deductible. In other words, does IRS consider GRT the same as Sales Tax for itemized deduction purposes.

According to an IRS ruling, that depends on how your arrangement with the builder was structured.  An individual who
purchases a personal residence from a builder or developer is not entitled to a federal income tax deduction for the New Mexico gross receipts tax imposed on the sale.  The ruling allows a deduction, however, if the purchaser contracts with the builder to construct the home and if the agreement between the parties provides that the builder will act as the purchaser's agent and will purchase the home building materials so that the purchaser is billed directly by the seller of the materials.

Please follow this link for a thorough discussion.  <a rel="nofollow" target="_blank" href="https://www.abqjournal.com/90411/home-remodel-tax-deduction-questionable.html">https://www.abqjournal.com/90411/home-remodel-tax-deduction-questionable.html</a>

Thank you. I wish I had researched this earlier so as to set up our contract to meet the conditions shown in the ABQ Journal article. We did pay for some of the materials directly, so at least that should be allowed. Since that article is 5 years old, I will try and do some further research to see if anything might have changed.