Sales Tax - Home
1

Normally, sales tax is not paid when purchasing real estate. You would want to verify that you actually paid sales tax before entering an amount.

Per IRS Instructions for Schedule A (1040) Itemized Deductions, on page A-6:

Line 7. Enter on line 7 any state and local general sales taxes paid on the following specified items. If you are completing more than one worksheet, include the total for line 7 on only one of the worksheets.

  1. A motor vehicle (including a car, motorcycle, motor home, recreational vehicle, sport utility vehicle, truck, van, and off-road vehicle). Also include any state and local general sales taxes paid for a leased motor vehicle. If the state sales tax rate on these items is higher than the general sales tax rate, only include the amount of tax you would have paid at the general sales tax rate.
  2. An aircraft or boat, but only if the tax rate was the same as the general sales tax rate.
  3. A home (including a mobile home or prefabricated home) or substantial addition to or major renovation of a home, but only if the tax rate was the same as the general sales tax rate and any of the following applies.
    a.  Your state or locality imposes a general sales tax directly on the sale of a home or on the cost of a substantial addition or major renovation.
    b.  You purchased the materials to build a home or substantial addition or to perform a major renovation and paid the sales tax directly.
    c.  Under your state law, your contractor is considered your agent in the construction of the home or substantial addition or the performance of a major renovation. The contract must state that the contractor is authorized to act in your name and must follow your directions on construction decisions. In this case, you will be considered to have purchased any items subject to a sales tax and to have paid the sales tax directly.

If you elect to deduct state and local general sales taxes instead of state and local income taxes as an itemized deduction on Schedule A (Form 1040) Itemized Deductions (you cannot deduct both):

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Itemized or Standard Deductions in the Federal Quick Q&A Topics menu to expand, then click Taxes paid.
  3. Continue with the interview process to enter all of the appropriate information.
  4. On the screen titled Would you like to review your state and local sales tax?, click Yes.
  5. On the screen titled Choose your sales tax calculation method, click any of the buttons provided. If you click Table Amount, you will need to enter the state(s) and the number of days lived in the state(s), as well as any local and state general sales tax rate, if applicable.

To figure your state and local general sales tax deduction, you can use either your actual expenses or the state sales tax tables. TaxAct will use the higher of state and local income taxes, or state and local general sales taxes to report on Line 5 of Schedule A.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.