Return to the Building a Home Forum | Post a Follow-Up

 o
Is there a sales tax savings to buy cabinets, etc. via builder

Posted by farmhousegirl (My Page) on
Mon, Jul 14, 14 at 19:40

We are finalizing our contract. There are allowances for cabinets, counters, etc. and I don't think we will be using our builders cabinet source..(.they seem pretty limited and I have something else in mind. ) He said we can go anywhere to get the cabinets and they will install. Just wondering if it makes sense to pay the builder our money and then get back an 'allowance' to spend when we are going elsewhere anyway. It just seems to muddy the waters and too much money moving in different directions. Would it make sense to take out the allowances in the contract for things they are installing anyway just to make the process simpler? Or is there a sales tax savings if you go through the builder? Thanks


Follow-Up Postings:

 o
RE: Is there a sales tax savings to buy cabinets, etc. via builde

If you are in a taxable state then someone pays them and while he may purchase using a resale number, he's selling to you and whether or not he breaks it out for you, you are being charged the tax.
The same for all the materials supplied by him.


 o
RE: Is there a sales tax savings to buy cabinets, etc. via builde

The sales tax itself is tax deductible. There is a 'standard deduction' for sales tax, but there is a provision for spending more on sales tax than normal- items such as a new car, or a lot of materials for building a house. I keep a spreadsheet for our build, and record all of the sales taxes for this purpose.


 o
RE: Is there a sales tax savings to buy cabinets, etc. via builde

MushCreek, so when you pay your income taxes the following year, you use this standard deduction?


 o
RE: Is there a sales tax savings to buy cabinets, etc. via builde

You would use the standard sales tax deduction, plus the amount you spend on an unusually large purchase. We've been spending about $30K a year on taxed items just for the house alone, or nearly $2K more sales tax than a 'normal' family. If the house is being built by a builder, you'll spend a lot more than that in a year, but I am building by myself, so it is going to take about 3 years.

I am NOT a tax expert; I just follow the instructions in the software, so make sure for yourself, but I recommend saving all of your receipts. Hint- Keep a running spreadsheet, rather than doing it all at tax time. There are a LOT of receipts!

It really annoys me that there are no tax breaks for building 'green', other than geothermal. If I put my beautiful new windows in my old house, there is a deduction, but for a new house- no. I spent a lot of money so that my new house uses 1/3 of the energy that my old one did, and got NO tax breaks other than sales tax.


 o
RE: Is there a sales tax savings to buy cabinets, etc. via builde

In general, how it works in a contract situation where the contractor is supplying the material, in his tax filing he list the total of the taxable material provided and writes a cheque to the taxing agency based upon that total. Which in turn becomes a deduction from his profits, in the calculation of the amount he then pays income tax upon.

For a complete clarification, contact your tax preparer.

Hopefully, not H&R block.


 o
RE: Is there a sales tax savings to buy cabinets, etc. via builde

farmhousegirl -- my understanding is that for 2013 you can deduct either state income tax or state sales tax (but not both) on your federal return.

Here is a link that might be useful: deductions for state taxes


 o
RE: Is there a sales tax savings to buy cabinets, etc. via builde

Wouldn't a new kitchen be considered a "capital improvement" and you would pay no sales tax if you are purchasing it installed (I know it would be that way in NY)? And if you purchase the cabinets flat out yourself and then have someone do install only you would pay the sales tax at the time of your purchase.


 o Post a Follow-Up

Please Note: Only registered members are able to post messages to this forum.

    If you are a member, please log in.

    If you aren't yet a member, join now!


Return to the Building a Home Forum

Information about Posting

  • You must be logged in to post a message. Once you are logged in, a posting window will appear at the bottom of the messages. If you are not a member, please register for an account.
  • Posting is a two-step process. Once you have composed your message, you will be taken to the preview page. You will then have a chance to review your post, make changes and upload photos.
  • After posting your message, you may need to refresh the forum page in order to see it.
  • Before posting copyrighted material, please read about Copyright and Fair Use.
  • We have a strict no-advertising policy!
  • If you would like to practice posting or uploading photos, please visit our Test forum.
  • If you need assistance, please Contact Us and we will be happy to help.


Learn more about in-text links on this page here