Wednesday, February 11, 2009

Sales tax deduction for home repairs

If you spend a lot of money for repairing your home, would the sales tax on the materials be deductible if it exceeded your state income tax?
If a contractor buys the materials tax free and "resells' them to the customer and charges the customer the tax on the resale price, it might work. Contractors, in the past, always billed lump-sum unless their customer was an exempt organization, in which case they broke out the materials, obtained an exemption certificate from the customer and issued a resale certificate to their supply source.

If insurance reimbursed the customer for the materials, then the tax on the materials attributable to the reimbursement would not, in my opinion, be deductible.
http://www.1040.com/taxxcpa/

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