A home should fit its owner, and many homeowners spend considerable amounts modifying their dwellings to assist with health problems or disabilities.
Wheelchair ramps, wider doorways, lifts to second-story living spaces, grab bars in showers, shortened shelves and lowered cabinets. . . many home improvements can be deductible for federal tax purposes if they are made to accommodate medical conditions or disabilities. The write-offs are a bit more complicated than some other deductions in tax codes, but they also can be very beneficial.
Here’s the key qualifier for placing them on your 2016 tax return: all medical and dental expenses paid last year must amount to more than 10 percent of adjusted gross income. (There is one notable exception – the threshold falls to 7.5 percent of adjusted gross income for taxpayers and spouses who turned age 65 before Jan. 2, 2017.) The expenses being deducted also cannot have been reimbursed by health insurance or another source, the Internal Revenue Service says. In short, you must have paid them personally.
Claiming medical deductions also will involve filing the full Form 1040. Medical expenses are itemized deductions, and taxpayers take them on Schedule A, which is part of the 1040. The shorter versions, which are Forms 1040 EZ and 1040A, don’t allow itemizing.
Spending for immediate medical treatments is an obvious type of medical deduction. But the IRS and federal tax codes also allow deductions for remodeling a dwelling or adding equipment to it for medical reasons. (Changes for other personal reasons such as appearance or architecture won’t work.)
Here are examples of some deductible costs:
- Building wheelchair or walking ramps for entering/leaving your house. Leveling out the ground for home access also may qualify.
- Installing railings or bars in bathrooms.
- Modifying hardware on doors, such as replacing knobs with levers.
- Relocating electrical outlets or fixtures.
- Adding lifts to different floors in a house or changing stairs.
- Widening hallways or doorways for wheelchair.
- Lowering kitchen cabinets.
- In some cases, moving rooms such as bathrooms, to another floor.
Ongoing maintenance of these medically necessary improvements also can qualify for the deduction.
This deduction gets more complicated if the improvements add value to your home. If so, the taxpayer might only be able to deduct the cost above the increase to the value of the house.
For a deeper look into medical deductions, see IRS Publication 502. It also contains an alphabetical list of various eligible medical expenses and their limitations.
The circumstances for medical deductions are highly individual, of course. We at EricJohn Ltd. can help assess medical spending and make the proper filings for deductions on your tax return.