From caring for an aging relative to accommodating a long-term medical condition, there are many situations in which you may need to make specific home improvements in response to your household’s health-related needs. The good news is you may be able to deduct the cost of these home renovations as a medical expense on your taxes! Read on for more information.
What Qualifies as a Medically Necessary Home Improvement?
If the primary purpose of a specific home improvement is to provide medical care for you, your spouse, or someone who qualifies as a dependent in your household, then it can be deducted as a medical expense. This includes installation of specialized medical equipment, as well as structural modifications or renovations to your home.
Some examples of medically necessary home improvements are:
- Constructing access ramps for someone unable to use steps
- Grading the ground outside the house to provide easier access
- Widening doorways or hallways to accommodate wheelchairs or other medical equipment
- Modifying bathrooms with railings, support bars, or other equipment to assist residents
- Installing grab bars or handrails anywhere on the property
- Lowering or modifying kitchen storage and equipment
- Moving or modifying electrical outlets or fixtures
- Installing lifts or modifying stairways
Keep in mind, these changes to your home must be made in response to a current medical condition of someone in your tax household. If you install equipment for a frequent visitor, or make changes that are primarily architectural or aesthetic, the cost is not deductible.
Factoring in the Value of Your Home
If you decide to claim a home improvement as a medical expense, you have to take into account any change to the value of your home. If a change you make in response to a medical need increases the value of your home, you cannot deduct the full cost of that change.
If the value of your home increases after a medically necessary home improvement, you must determine by how much. If the value of the improvement is greater than or equal to the cost of the improvement, you cannot deduct any amount. In the eyes of the IRS, you’ve already gotten your money back for that expense.
If, on the other hand, the cost of the improvement is greater than the increase in value, you can deduct the difference between those two amounts. That way, you will break even in terms of how much money you spent to make the improvement.
If you reside in Saint Louis or the surrounding area, the team at Taxation Solutions, Inc. can help with any questions you may have about deducting the cost of medically necessary home improvements. We’re here to provide comprehensive assistance for all your tax queries!