Discussion:Clarification of Sales Tax Deduction
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Discussion Forum Index --> Advanced Tax Questions --> Clarification of Sales Tax Deduction
Discussion Forum Index --> Tax Questions --> Clarification of Sales Tax Deduction
| 8 June 2008 | |
| On the IRS website (http://apps.irs.gov/app/stdc/stdc.html) it states that, after using the estimated sales tax tables, you can add the amounts you paid for "a substantial addition to or major renovation of a home." It seems to me that this wording would EXCLUDE any landscape improvements but I wanted to get a second opinion. Thanks! | |
| 8 June 2008 | |
| According to The Tax Book - P. 4-3 - the only reference to this is "materials to build a home".
But landscape improvements wouldn't physically change the building -just the land surrounding the building. So your presumption is correct. | |
| 8 June 2008 | |
| People tend to get confused about the sales tax deduction allowable when they hire a contractor to do the work. In Illinois and in many other states, when the contractor pays for materials and does the construction work, there is no sales tax stated on the contractor's invoice. In that situation, sales tax is not deductible. The contractor pays the sales tax (or use tax) and includes it in the price; therefore there is no deduction for sales tax for the homeowner.
This is different if you pay for the materials directly, including sales tax, and pay a contractor for his labor. | |
| 9 June 2008 | |
| Also there are a few states where the contractor actually charges sales tax on his invoice in some circumstances. I've found such exceptions in Washington State and Texas. There may be others. | |
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