Tax Tip of the Week
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Some home improvements are deductible medical expenses
For the week of
December 24, 2001
Assuming your home improvement is for a bona fide medical purpose, the construction
cost is deductible to the extent that the cost exceeds the increase in value of your home. You are only permitted
to take a deduction for the costs not compensated by insurance. Assume that your doctor recommends an air conditioner/filter
system for your allergies. If the system costs $6,000 but the increase in the value of the home is $2,000, you
have a $4,000 deductible medical expense.
Your medical expenses are only deductible to the extent that they exceed 7.5% of your adjusted gross income for
the year of payment. Examples of home improvements that might qualify as a medical expense are elevators, air conditioners,
handrails, ramps, and special plumbing fixtures. A swimming pool may qualify, assuming that your physician recommends
it as a necessary medical treatment and not just for general health.
There are several structural changes to your home that don't increase the value of the home. This makes the expenditures
fully deductible as medical expenses. Common examples are constructing wheelchair ramps, widening doorways, and
modifying bathrooms, stairways, and hallways to accommodate a physical condition.
If you need assistance with your tax planning, please contact us. The best
tax planning is done before you complete a transaction or before you sign on the dotted line.
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