You choose the general sales tax deduction, which is a standard deduction based on your income and location, and you add the sales taxes paid on the remodeling supplies (not labor), not to exceed the amount which would be obtained at the rate of the general sales tax in your area, and if you have any contractor(s), they are all considered your agents under state law, and you are considered to have full control over the ordering of supplies. This may include sales taxes on services, like installation.ī. You itemize the actual sales taxes paid during the tax year. You elect to deduct state sales taxes instead of state income taxes. You may deduct the sales taxes on a major home improvement if:ġ. Just make sure that when you enter this information under the "Major Purchase" section, that your sales tax divided by your cost is your general state's sales tax rate. So if you used a 8% general sales tax rate for your state, this would have to be the same sales tax rate for your building material purchases. (screenshot)Īs noted above: you are only allowed the major purchase additional sales tax amount if the sales rate you used for your general state sales tax rate is the same sales tax rate on your major purchase. Enter your building material information and sales tax here on the next screen.On the screen that says Major Purchase - select "yes".
If your state sales tax information is already entered you will need to edit it to enter your major purchases information.Choose - continue to sales tax and choose " Easy Guide".Choose "show more", then Sales Tax (start/update/revisit).Scroll down the screen until to come to the section “ Estimates and Other Taxes Paid ”.Next click on "jump to full list" or “I’ll choose what I work on”.Once you are in your tax return, click on the “ Federal Taxes” tab ("Personal" tab in TurboTax Home & Business).To enter your sales taxes and major purchases in TurboTax Online or Desktop, please follow these steps: You are taking the state's sales tax deduction as opposed to the state's income tax deduction.The sales tax rate on this major purchase needs to be the same rate as your state's general sales tax rate.This additional major purchase is only allowed for materials used on a personal residence (any rental improvements will be included under the rental section)Ī few things to remember about this deduction, you will only get this extra deduction if: Yes, you will include the sales tax on these improvements under the "building material" category under the major purchases under sales tax. However, if these are capital improvements and they increase the value of the home, you can add the cost to the basis in your home. Unfortunately no, you can not deduction home improvement costs on a personal residence.
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