New home construction materials sales taxes

[jerrycrosby77]

I hired a builder to construct a new home for me, and we had a 'cost-plus' contract.  The builder paid all the materials and labor costs (including sales taxes) and billed me for those costs plus his 12% contractor's fee.  I have the receipts for all the costs.  The sales taxes he paid exceeds $21000.  He paid the bills, and then I paid him that amount plus 12%.  Can I deduct these sales taxes?

[AnnetteB6 · Accepted solution]

Yes, you can deduct the sales tax paid for the materials used to build your home.  However, be aware that the deduction will be limited to $10,000 (or $5000 if married filing separate).  This limitation is applied to state and local taxes claimed on Schedule A as part of the Tax Cuts and Jobs Act.  

Be sure to keep the receipts and proof that you paid the builder the cost of the materials.