Ask Kim
Tax Deductions for Remodeling
My son was diagnosed with brittle bone disease. We will need to remodel our home to accommodate his needs. Can I write off these expenses?
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
August 8, 2005
My son was diagnosed with brittle bone disease. We will need to remodel our home to accommodate his needs. We will need to replace the tile flooring and widen the hallways to accommodate a wheel chair and make the back yard accessible with ramps. Can I write off these expenses?
You can deduct the cost of remodeling you need to do because of your son's medical condition -- but only to the extent that it doesn't increase the value of the home.
The IRS has determined that the costs to add ramps and support bars, as well as to widen hallways and doorways for a wheelchair, can be deducted in full as medical expenses. But some other expenditures, such as installing higher-quality flooring or an elevator, may add to your home's value -- ask a real estate professional how much value it might add when determining how much you can deduct.
If, for example, remodeling costs a total of $50,000 but increases the value of your home by only $5,000, you can consider $45,000 a deductible medical expense. Add the remodeling costs to other unreimbursed medical expenses, which are deductible only to the extent that they exceed 7.5% of your adjusted gross income, and only if you itemize. If you earn $100,000 and have $40,000 in medical expenses, you can deduct $32,500.
You may be able to include some medical expenses you may not have considered -- such as travel for yourself and your son for medical purposes and the extra cost to modify a vehicle to accommmodate a wheelchair, says Mark Luscombe, principal analyst with CCH Tax and Accounting, which publishes tax resources for professionals. For a list of deductible medical expenses, see IRS Publication 502 Medical and Dental Expenses.
Another way to get a tax break: If your employer offers a flexible spending account funded with pretax dollars, you may be able to use that money to pay for the remodeling, says Martin Nissenbaum, national director of personal income tax planning with Ernst & Young. Check with your benefits department.
