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Are Your Home Improvements Deductible as Medical Expenses?

You can include in medical expenses amounts you pay for special equipment installed in a home, or for improvements, if the main purpose is medical care for you, your spouse, or your dependent. The cost of permanent improvements that increase the value of your property may be partly included as a medical expense. The cost of the improvement is reduced by the increase in the value of your property. The difference is a medical expense. If the value of your property isn't increased by the improvement, the entire cost is included as a medical expense.

Example: As part of your chronic medical treatment your doctor advises you to swim every day. The new pool cost $25k and your realtor believes it only increases your home’s value by $20k. The excess $5k ($25K paid less $20K increase in home’s value) is treated as medical expense.

Certain improvements made to accommodate a home to your disabled condition, or that of your spouse or your dependents who live with you, don't usually increase the value of the home and the cost can be included in full as medical expenses. Some examples of improvements that don’t increase your home’s value are:

• Constructing entrance or exit ramps for your home.

• Widening doorways at entrances or exits to your home.

• Widening or otherwise modifying hallways and interior doorways.

• Installing railings, support bars, or other modifications to bathrooms.

• Lowering or modifying kitchen cabinets and equipment.

• Moving or modifying electrical outlets and fixtures.

• Modifying stairways.

• Adding handrails or grab bars anywhere (whether or not in bathrooms).

• Modifying areas in front of entrance and exit doorways.

Need a consultation on medical expenses and itemized deductions, contact me for a tax planning meeting.

Richard Pon CPA, CFP