"MTW" <mtwingcpa[at]yahoo.com> wrote:
- quote -

Washington residents are among those who will benefit most
from the new federal rules, because there is no individual
income tax (so no deduction before the law change) and the
sales tax applies to the entire amount of a construction
contract.

In Washington, the contractor buys all of the materials
under a resale exemption, and the purchaser is the sales
taxpayer.

There may be other states that treat construction contracts
the way Washington does, but I don't know of any offhand.

Katie in San Diego
The foregoing is intended for educational purposes and does
not constitute legal or professional advice.

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Stuart Bronstein <spamtrap[at]lexregia.com> wrote:
- quote -

That makes sense to me.

Katie in San Diego
The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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Seth Breidbart wrote:

- quote -

You would need to look at applicable state law. In WA state,
BOTH labor and materials on a home improvement are subject
to sales tax. So, you can "mix-n-match" the transaction
anyway you want, you will still end up paying sales (or use)
tax on the whole thing.

MTW

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Katie Jaques wrote:
- quote -

That's correct for California.

- quote -

Well, that depends. If the contractor ever makes retail
sales of products he does not install (e.g. Home Depot is a
contractor as well as a retailer), it is possible to do
that.

It would even be possible, for example, to purchase things
from Home Depot, and subsequently hire Home Depot to install
them. In that case there would be sales tax on the initial
purchase, but not on the subsequent installation.

However if the purchase and the installation are contracted
for in a single transaction, the contractor is required to
charge tax on the entire transaction including the services.

Stu

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sethb[at]panix.com (Seth Breidbart) wrote:
- quote -

I can speak only with respect to California, and not with
much authority on that since I haven't looked anything up
<G> . However, I believe you could purchase the materials
yourself from a third party and hire the contractor only to
install them. Then you would be the taxpayer.

I don't think you can buy the materials from the contractor.
He is the consumer and he has to pay the tax when he buys
materials. He can't buy them ex-tax and charge you the
sales tax.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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- quote -

In many cases, sales tax (at least local tax) isn't paid on
construction materials. Instead, the building permit fee is
in lieu of sales tax. When we did a remodel of our home a
few years ago, we only paid county and state tax; no city
tax.

--
Thomas E Healy, CPA, PC
1650 38th St., Ste 202W
Boulder, CO 80301
Please send email to: tom[at]tomhealycpa.com, since I block all email at my
newsgroup address.
phone (303) 443-1804
fax (720) 489-3772

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- quote -

Probably not. Most states that I know of have a sales tax
exemption of equipment/additions to real property - seems
like something to do with double taxation and real estate
taxes.

--
Regards,

Mark Rigotti

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Herb Smith <smithff33[at]aol.com> wrote:

- quote -

Which makes it a business expense to him.

- quote -

As a customer, I _never_ pay sales tax to a taxing
authority; I pay it to a retailer, who remits it to a taxing
authority. (Use tax I pay directly.)

Seth

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Katie Jaques <katiej_1958[at]yahoo.com> wrote:

- quote -

What if I buy the stuff myself, and hire the contractor to
install it?

In that case, does it matter if I buy it from the contractor
or someone else?

Seth

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sethb[at]panix.com (Seth Breidbart) wrote:
- quote -

It depends on the law of the state involved. In most
states, a construction contractor is the consumer of
materials, and therefore pays the sales tax on them. The
contractor, not the customer, is the taxpayer.

In California, the contractor is the retailer of fixtures,
which includes such items as built-in appliances, furnace,
water heater, etc. The contractor purchases those items for
resale (ex-tax) and charges sales tax to the customer. The
customer can deduct those taxes.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

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Seth Breidbart wrote:
- quote -

Remembering the "good old days" of sales tax deductions,
not even if the builder separately stated the tax on the
invoice. (Invoice for a house? grin). Anyway, sales taxes
are not imposed by states on third parties anyway.

ChEAr$,
Harlan Lunsford, EA n LA
Tue, 23 Nov 2004 17:28:25

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cshiflett[at]att.net (cshiflett[at]attREMOVE-THIS.com) wrote:

- quote -

Any sales tax paid by the builder for materials (if any) is
usually not a deduction to him - the tax is capitalized as
part of the material cost.

You can't deduct the sales tax, since you did not pay it to
a taxing authority.

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A.G. Kalman <glendale202-mtm[at]yahoo.com> wrote:
- quote -

What if he got the builder to separate out the materials and
labor/other in his bill, so he _did_ pay sales tax on the
materials?

Seth

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- quote -

You can only deduct the taxes if your name is on the invoice
for the materials. Since you purchased the finished product,
unless the tax is separately stated on the documents, you
are out of luck on this one.

Sorry..

Bruce Raskin, CPA

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I dont think SO !!

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cshiflett[at]att.net (cshiflett[at]attREMOVE-THIS.com) wrote:

- quote -

A little more info: The law is the Amerian Jobs Creation
Act.

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shiflett[at]attREMOVE-THIS.com wrote:

- quote -

Not deductible, as you did not pay a general sales tax to
the seller.

--
Alan
http://taxtopics.net

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cshiflett[at]attREMOVE-THIS.com wrote:

- quote -

I'm pretty sure the deductions for building materials
purchased will be same as they once were. And since you are
not buying the materials, you may not deduct the sales tax.
If you hire a subcontractor and pay his labor only and you
buy materials for home improvement, then you may.

Incidentally, I expect this is the reason we all get
questions from clients about "taking home improvements off
on my taxes." (grin)

ChEAr$,
Harlan Lunsford, EA n LA

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I read in a newspaper article that, under the new law that
Congress passed relative to deducting sales taxes, that I
can deduct taxes paid on material to build a new house. I
had a developer build a new house for me this year. He also
built other houses in this development, so he probably
bought materials for several houses at a time.

My questions are:
1. Are the sales taxes on materials used to build my house
deductible if the builder bought the materials, and I
eventually paid them in the form of the purchase price
of the house?

2. If so, what records would I request from the builder to
prove the amount of the sales taxes paid?

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