I know that there are very few people that build their own home themselves but I finally did it. Now I need help. How do I get the best deduction for the spending on materials and taxes? Please help.
No, you cannot deduct the cost of building your house.
You may be able to deduct:
Be sure to hold onto your closing statement, as it lists expenses that could be deductible, like points and prepaid interest.
Also, start saving your home improvement receipts. You won't be able to deduct those right now, but they can reduce your gain (along with any capital-gains tax) when you sell in the future.
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Thanks for thanks for the reply earlier, but I was really interested in whether or not I could claim the sales taxes I paid on all of the materials. And if so where would I show that in the tax forms.
Report your sales tax deduction on Schedule A. In the section entitled "Taxes You Paid" be sure to check the box indicating your choice to deduct state sales tax instead of state income tax and enter the amount of your deduction.
TurboTax can help you with determining your eligibility, calculating the deduction and reporting it on all the correct forms.
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.