I sold my principal residence on an installment sale in 2011 and final payment in 2014. i am single and recceived the $250 K exclusion. I received a large capital gain cause I owned the property forever. This year (2014) my tax is much more than it was in 2011, because the itemized deductions are almost null , because the capital gains approx. $450K put me into the highest earnings bracket. In 2014 I paid the tax for the 2011 installment sale (I couldn't afford to pay it in 2011). When I did my 2014 tax return I put on schedule A line 5 the $40K plus I paid in 2014 for 2011 state taxes less penalties and interest. and because of the phasing out of itemized deductions for high income earners an the AMT tax that $40k deduction was reduced to only $3K. Due to the fact that the high earnings were from the sale of my house (I gave up my house to get that money), and it would cost that kind of money to buy another one in the same area, I don't see why I don't get the tax break for the state tax I paid. iS THERE ANYWAY TO GET THOSE NEEDED DEDUCTIONS?