Medical Expense Deduction for Home Improvements?
Home Renovations as a Medical Expense Deduction?
How in the world can I deduct renovations to my home as a medical expense deduction? Won’t the Internal Revenue Service audit my return and penalize me for doing something like this?
Well, the truth of the matter is yes, you can deduct these expenses, within certain limits, and subject to certain conditions. There are many individuals that live with chronic disease or some other condition that leaves them disabled.
Oftentimes, a home built with no features that assist the disabled must have changes made that can be quite costly. Besides extensive renovations, certain medical conditions may require installation of equipment which adds to the cost.
Being able to claim these items as a medical expense deduction on your tax return does help to defray a part of the expense. For 2015, those under age 65 can deduct the amount that exceeds 10% of their adjusted gross income and others 65 or older, can deduct amounts that exceed 7.5% of their AGI.
[bctt tweet=”Before deducting any medical expenses, be sure that they are medically prescribed. ” username=”HBSMoneyTips”]Also, they should help the disabled individual to better cope with their condition or even improve it. The following lists some of the items that are a medical expense deduction, but it is not all inclusive:
- Ramps for the handicapped
- Making doorways & stairways wider to accommodate wheelchairs
- Support Bars and Railings
- Lowering cabinets for wheelchair bound
- Lowering electrical & cable outlets
- Fire and smoke detectors
- Stairway chair lifts
- Air cleaners for those with pulmonary issues
- Electricity to operate medically required equipment
You need to be especially aware that any improvements or equipment that increases the value of your home cannot be classified as a deductible medical expense.
There is one additional item that raises eyebrows and may flag your return for audit. That is the installation of a swimming pool. There are some medical conditions that benefit from swimming if your doctor prescribes it.
You need be very careful however, as an in-ground pool may increase the value of your home. Your starting point is to determine how much the pool increased the home value. Subtract that amount from the pool cost. Next, you must determine how much the pool is used for personal use and therapy use for the individual. The net therapy amount would then be a deductible medical expense.
To summarize, in order for you to deduct any of the above as a medical expense deduction, it must first be prescribed by a physician. Secondly, the expense being deducted must not have increased the value of your home. Lastly, keep good records to substantiate the amount being claimed as a deductible medical expense.