If you itemize your deductions, you have the option to deduct a portion of your unreimbursed medical expenses (check the current IRS guidelines for how much you can deduct). Along with those deductions, you can also deduct the cost of medically necessary home improvements since those are, technically, medical expenses.
What Makes a Home Improvement “Medically Necessary”?
Home improvements are considered medically necessary if the main purpose is to accommodate a household member with a long-term medical condition. Addressing a medical need must be the main purpose of any improvements you deduct. Changes made primarily for aesthetic reasons (even if there’s an underlying medical benefit) do not qualify.
Medically necessary home improvements can include:
- Installing ramps or grading walkways to accommodate wheelchair access
- Installing hand rails or grab bars inside or outside the home
- Modifying interior fixtures (light switches, appliance placement, etc.) to be wheelchair accessible
The Fine Print: Accounting for Any Difference in Home Value
If you deduct medical home improvement expenses on your taxes, it’s important to take into account any change to the value of your home. If an improvement you make increases the value of your property, you can’t legally deduct the full cost of that work. You can only deduct the cost of the improvement minus any change in value.
In other words, the IRS wants to make sure that you’re not benefitting twice. You can’t benefit from an increase in the value of your home and take a tax deduction.
For help determining when home improvement expenses fall under the “medically necessary” umbrella, contact the team at Taxation Solutions, Inc. We are on call to assist clients in Arlington and the surrounding area in maximizing their tax deductions when it comes to deducting medical expenses and home improvements.