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-- Posted: July 17, 2000

Dorothy Rosen -- The Dollar Diva Ask the Dollar Diva

Can I deduct my pool installation?

Dear Dollar Diva,
I have scoliosis, and my doctor has recommended a swimming pool. Is there any way to deduct any of the costs of having a pool installed?

-- Dora

If your doctor advises you to get a pool for general health reasons none of it will be deductible. If he advises you to get a pool as a treatment for a specific disease, part of it may be deductible. The Diva will explain the rules to you.

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All or part of a capital expense can be deducted as a medical expense if it relates to a specific disease in any of the following ways:

  • diagnosis
  • cure
  • mitigation (relief)
  • treatment
  • prevention

Why would only part of it be deductible?

If the capital expense increases the value of your home, your deduction is limited to the difference between the cost of the home improvement and the value it adds to your home. A swimming pool or elevator would fall into this category. If your swimming pool costs $15,000 to install, and it increases the value of your home by $10,000, your medical deduction would be $5,000, plus all current and future costs for operation and upkeep. This assumes the main reason for the pool is medical care.

The Diva reminds you that the IRS only allows a medical deduction for "reasonable costs" to accommodate a home to a disabled condition. Don't expect to deduct a waterfall and Tiki bar.

The deduction gets taken as an itemized deduction on Schedule A of your tax return.

When would it all be deductible?

If the capital expense does not increase the value of your home, such as a ramp for a wheelchair, then the whole thing's deductible.

How do I support the deduction?

Get a written note from the doctor prescribing the pool and have him state the benefits you will receive from it. Remember, it can't just be to improve your general health; it has to have a specific therapeutic value. The Diva has no medical background, so she doesn't know what benefit a swimming pool will provide for someone with scoliosis. The IRS gets fussy with these kinds of deductions, so you want to make sure you have the medical support you need to defend your deduction.

You'll need to substantiate the value of your home before and after you install the pool. Although not required, an appraisal before and after the installation would be the best support. Your local real estate agent is a good place to go for help in this area.

You do not attach the doctor's note or the appraisal to the tax return you send to the IRS. It gets filed away with your copy of the tax return so you'll have the support at your fingertips in the event of an audit.

For more information on taking deductions for medical expenses read the Diva's "Deduct your car expenses" and "IRS Publication 502, Medical and Dental Expenses."

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