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Deducting Medical Home Improvements

Ordinarily, you cannot deduct the cost of permanent improvements to your home. However, there is an exception: These costs can be tax deductible as medical expenses if their main purpose is medical care for you, your spouse, or your dependents.

But, such expenses are deductible only if you itemize your deductions and only to the extent they exceed 10% of your ...adjusted gross income for the year (7.5% if you're 65 or over). Moreover, the cost of the improvement must be reduced by the amount it increases the value of your property. If the value of your property is not increased by the improvement, the entire cost can be included as a medical expense.

Among the expenses that can be deductible are improvements to make your home wheelchair accessible or to make it easier for a disabled person to get around the home, including:
•constructing entrance or exit ramps for your home
•widening doorways at entrances or exits to your home
•widening or otherwise modifying hallways and interior doorways
•installing railings, support bars, or other modifications to bathrooms
•lowering or modifying kitchen cabinets and equipment
•moving or modifying electrical outlets and fixtures
•installing porch lifts and other forms of lifts
•modifying fire alarms, smoke detectors, and other warning systems
•modifying stairways
•adding handrails or grab bars anywhere (whether or not in bathrooms).
•modifying hardware on doors
•modifying areas in front of entrance and exit doorways, and
•grading the ground to provide access to the residence.

Improvements such as these are not considered to add value to your home and are fully deductible as medical expenses.

Other improvements that do add value to your home can be deductible as well--for example, installing an elevator so that a disabled person does not have to use stairs, or installing a new bathroom on the ground floor of your home to avoid having to use stairs. Improvements such as these increase the value of your property, and may be deducted only to the extent they exceed the increase in the home value caused by the improvement.

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