[boomer]

If you self contract or hire a contractor to build a custom home for you, do you have to pay state sales tax on the materials and labor? If so, can you claim any of these taxes at the end of the year?

[DeltaBelle1978]

You have to pay sales tax on any item that you buy. Wheather you have a contractors exemption # or pay the taxes when you buy something. I honestly don't know about claiming it off on taxes, maybe someone knows how that would work. You don't pay taxes on labor peroid. (its illegal) meaning sales tax

Putting the income tax part aside (cause I don't know) here is two examples.

Company #1 is a retailer. He sales things for a living. He buys in bulk and sales for a profit. Well when he buys from his supplier, he gives them a tax # and he doesn't have to pay taxes on it, but when he sales that item, he has to charge sales tax to the person that buys it. That money he collects from the customer he has to file to the state and pay the taxes. On a daily, monthly, or quarterly basis.

Company #2 is a manufacturer. My husband is this. Ok he buys material and puts it together. When he buys material he pays taxes on everything that he buys for the job that he has to do. Than when he charges them, he does not add taxes to the job that he is doing for them. It is an amout that takes care of all of the expences plus the cost of labor. (I believe that a home contractor would fall under this category)

Both ways, the taxes on the material has been paid, but at the same time the taxes can not be paid twice. Meaning a contractor can not pay the taxes at the store and than turn around and charge you taxes also. (on top of the sale price) this would mean the taxes are collected twice and is illegal.

I know you didn't ask for all of that, I hope it helped a little. I know I didn't answer all that you asked. I haven't ever built a house.

If you have any questions I would be glad to help if I could. Just pm me If you don't understand what I said. Its hard to explain exactly how it would work without a little more detail. Are you treating it as a business or what? (to build and resale) This would change things as well.

[Briscoe01]

What about a cabinet company - they want us to give them all of the funds to purchase the materials upfront taxes included. Then they want to charge us taxes again on materials plus on labor in the end. They will not give us a breakdown on what our materials cost is vs labor!!! what say you???

[Southlander]

Get a quote from a couple of different cabinet companies.

On the OP's question...it may depend on the county and on the municipality. In our town, I believe a building permit cost has something to do with the sales taxes on items...at least on the CITY sales taxes. I would check with your city building department first. If you're building in and unincorporated that does not require a building permit, you might talk with a couple of builders.