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Sales Tax Deduction - Home Renovation

Using the IRS Sales Tax Deduction Calculator (https://www.irs.gov/credits-deductions/individuals/use-the-sales-tax-deduction-calculator) users are asked if they purchased (or started a long term lease) for big ticket items like Motor Vehicles, Boats, Aircrafts, a Home, or a Home Renovation. I've searched everywhere and cannot seem to find an answer to what constitutes a home renovation? I understand that the following conditions must apply in order in order to deduct the sales tax on a home renovation:

  • You're itemizing
  • You're taking the sales tax deduction, as opposed to the state/local income tax deduction
  • The tax rate is equal to your state and local general sales tax rate
  • You (or your contractor acting as your agent) purchased the building materials and paid the tax

 

However, I want to know, what constitutes a home renovation? Would major projects like replacing a furnace, a replacing an electrical panel, replacing windows or doors? Or does it need to be more substantial than that?

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1 Reply
rjs
Level 15
Level 15

Sales Tax Deduction - Home Renovation

The IRS instructions for Schedule A use the terms "substantial addition" or "major renovation." I have not seen any more detailed definition of those terms. But in my opinion, your examples of replacing various things do not amount to a substantial addition or major renovation.

 

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