I think it would be unusual to have paid sales tax on new home constuction unless you were buying all the material yourself. I guess that would depend on your state regulations. At any rate, you would be better keeping track of all expenses involved and when you later sold the house, you would deduct EVERYTHING from the construction cost against any profit that you made on the sale.

PB - Thanks for the info, don't expect to sell the house, but I did keep receipts for materials that I purchased. We subbed the HVAC and kitchen. We ended up paying around $1,000, just in sales tax.
I thnk the benefit of deducting sales tax really only applies to the states that have no state income tax, as I've since discovered.

Actually, it's your choice. For 2004 and 2005, you can choose either to deduct your state income tax or your state and local sales taxes. For me, the choice is obvious, as my state has no state income tax. [Combined state and local sales tax in my jurisdiction is a whopping 9.25%.]

If you do choose to itemize and deduct sales taxes, you can either deduct from receipts (especially helpful if you buy big ticket items like a new car, etc.) or you can use the sales tax tables provided by the IRS.

Actually, you can use the IRS tables, then add taxes you paid for big ticket items - cars, etc and 'home building materials'.

We used the tables this year, but a friend of ours kept all her receipts for January - the table amount is WAY low. Now I'm trying to figure out how to keep receipts efficently!

Here is a link that might be useful: IRS

I'm using the sales tax deduction even though my state has relatively high income taxes.

We did a whole house remodel last year on a cost plus basis, so I had receipts for all of that, plus I went through my year end credit card summaries and tallied up all the charges subject to state sales tax.

To my surprise, the sales tax total was more than the state income tax, so I'm taking the bigger of the two deductions.

I didn't think the sales tax deduction would make sense when I glanced at the IRS booklet with the state listings, but ran the numbers just to be sure.

Like spewey, I live in a state with no state income tax. We do have a sales tax of 8.4% to 8.6% (depending on the county). So, for us, it's a no-brainer.

I saved all of our sales receipts this year because we finished out basement and bought some big ticket items.

It's tedious. I clip them together and try periodically to add up groups of them. Then I put them in an envelope, rubberband it together and write the total on the outside of the envelope. So far I have about 6 envelopes and another stack to add up. But the total is way over the amount the table give us.