If you or your spouse of specified dependents are facing medical challenege on account of aging or any disese or aging or for any purpose , it should be known that Sec. 213(a) of Internal Revenue Code allows deduction of home imporvements linked to medical care on self , one’s spouse, or a specified dependent as defined in Sec. 152 . It has been held by Court held that an expense on home improvement medical deduction allowed only if one shows that the expense was part of an essential element of treatment and would not have otherwise been incurred for nonmedical reasons (Refer Jacobs, 62 T.C. 813 (1974)).
Two most important condition for claim of medical deduction are
- You are allowed only upto amount 10% of your adjusted gross income.
- No insurance or other compensation received in relation to those medical care expense.
- This medical deduction is not for general health upkeep , but for medical care as defined in 213(d)(1) which is confined strictly to expenses incurred primarily for the prevention or alleviation of a physical or mental defect or illness.”
What is meaning of Medical Care for deduction purpose ?
Sec. 213(d)(1)) defines “Medical care” to include amounts paid “for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body”
How Home Imporvement Cost Covered Under Medical Deductions ?
The home imporvement costs include various expenditure like constructing an accessible entrance ramp, installing a lift, widening doorways to accommodate a wheelchair, and attaching grab bars and handrails as part of medical care of specified persons as stated above. If any special medical equipment is necessary for the patient , it is also allowble.
What You should care about ?
- There is no expense which falls for personal motvated expense like special cost of aesthetics . In other words, if you can not co-relate the expenditure with its necessity of medical care , it may not be allowed.[ refer Regs. Sec. 1.213-1(e)(1)(iii)]
- The increase in value of the home due to improvement is reduced from teh claim of home imporvment medical deduction , you should obtain an appraisal of the value of the related property before and after the improvements are completed.
- There must be some collection of proof that shows how the expenditure relates to taxpayer or related persons’s medical care. In this regard , various kinds of proof can be kept ready . These may be a letter from a physician regarding the requirement of home improvement for medical purpose or collection of various excerpts from websites devoted to the client’s health condition discussing home modifications may be useful.
IRS Ruling on Expenses That Do Not Increase the Value of a Residence (Generally )!
In Rev. Rul. 87-106, the IRS ruled that the following expenditures generally are eligible in full for the medical expense deduction when made for the primary purpose of improving personal residence to the handicapped condition of the taxpayer, the taxpayer’s spouse, or dependents who reside there:
- Constructing entrance or exit ramps to the residence.
- Widening doorways at entrances or exits to the residence.
- Widening or otherwise modifying hallways and interior doorways.
- Installing railings, support bars, or other modifications to bathrooms.
- Lowering of, or making other modifications to, kitchen cabinets and equipment.
- Altering the location of, or otherwise modifying, electrical outlets and fixtures. Similarly, lowering light switches should all be included.
- Installing porch lifts and other forms of lifts. (Generally, this does not include elevators, as they may add to the FMV of the residence, and any
- deduction would have to be decreased to that extent.)
- Modifying fire alarms, smoke detectors, and other warning systems.
- Modifying stairs.
- Adding handrails or grab bars whether or not in bathrooms.
- Modifying hardware on doors. A common application of this is replacing regular handles with lever handles.
- Modifying areas in front of entrance and exit doorways.
- Grading of ground to provide access to the residence.
The aforesaid list , as per IRS, not an exhaustive list