Do I pay sales tax on a home purchase?

When you purchase a good of any kind, it is subject to a sales tax administered by the state/local governments. When it comes to purchasing real estate, there is no sales tax issued upon the sale of the house/property. This is due to the fact that real estate prices are incredibly high as is, so the sales tax would make the price unbearably high. For example, if there was a house in California bought at $500,000 with the sales tax rate at about 10%, the homeowners would have to tack on an extra $50,000. That is an extremely high sales tax that would discourage people from purchasing the property. Now, when you are someone who purchases a lot, you won't be subject to a sales tax then, but upon building your house on the lot you will. The sales tax will come from the construction materials and service chargers upon building the house. The tax would go to the contractor and he would eventually just put the sales tax and put it within the overall price of the job.

Related Tax Questions