Home improvement costs are allowed as medical expenses
- Their main purpose is medical.
- The actual cost of the improvements exceeds
the increase in the fair market value of your home.
To prove the first, obtain a written statement from
your doctor explaining the medical need for the improvement. To
prove the second, include an appraisal of your home verifying the
resulting increase in fair market value, if any.
The medical expense portion of a home improvement
is calculated by subtracting the increase in fair market value from
the cost of the medically necessary home improvement.
For example, you add a swimming pool and obtain a
physician's statement verifying that the pool is for therapeutic
purposes. The cost of the pool is $20,000. A written appraisal indicates
your home's fair market value increases by $10,000 as a result of
this addition. Therefore, your medical expense portion is $10,000.
Be aware that some structural changes to your home
don't increase the value of your home, making them fully deductible
as medical expenses. Common examples are constructing wheelchair
accessible entrance or exit ramps, widening doorways or hallways,
and modifying bathrooms, stairways, outlets, fixtures, appliances,
smoke detectors, and fire alarms.
-- Posted: March 15, 2000