Carriage returns work fine in sentence templates, tabs not so much. The problem with tabs is that there is no mechanism to define their behavior - where does it tab to?
You enter carriage returns by using your computer's Enter key. There is no special code for them and they are invisible in the sentence template, but their effects are visible when you run a report. Well, you can also see the effects of the carriage returns when you are looking at the sentence templates, even if the carriage returns themselves are invisible.
There is also an option when you run a report - Keep fact sentences in same paragraph vs. New paragraph after every fact vs. New paragraph after facts with notes. You can try these options to see if they meet your needs.
I don't find these options to meet my needs for two reasons. One reason is that they are too much all or nothing. I want to be able to control new paragraphs on a case by case basis. The other reason (and this one is subtle) is that they operate by creating new paragraphs AFTER facts and they really need to operate by creating new paragraphs BEFORE facts. This may seem like a distinction without a difference, but in the case of the "after facts with note" option the logic is really backwards. You have to put a note (even a dummy and blank note) into fact A to influence to formatting of fact B which follows it. It's much better if fact A controls the formatting for fact A and if fact B controls the formatting for fact B than if fact A controls the formatting for fact B. I therefore include carriage returns at the beginning of my sentence templates where they make sense which is in most cases.
Despite all this, there is one situation where RM's sentence templates and white space controls have a major flaw that can't be corrected by anything I have described above. Namely, after the last family fact in a narrative report, the first sentence for the spouse is run on into the same paragraph. I fix this by appending two carriage returns at the end of the last family fact for each couple. This violates my preference for fact A controlling the formatting for fact A and for fact B controlling the formatting for fact B. But it's the only way I have discovered in RM7 to solve this particular problem. I'm hoping for major improvements in RM8 for controlling white space in narrative reports.