Tax Deductions for Home Spas and Pools
August 22, 2012 Uncategorized
Tax responsibilities for home renovations can be quite strict and this means you are liable to pay taxes for improvements in your house that are considered as a luxury. This includes the construction of a swimming pool, a spa, an elevator, a ramp, or a lift. But do you know that these home improvements, although they can be categorized as luxury additions to your home, can become tax deductible?
So how do you make swimming pool, lap pool, or spa additions to your home tax deductible? It will depend on the intention for constructing these structures in your home. If you can show that these additions are necessary for maintaining your health then you can deduct these on your tax return as medical expenses.
The basis for this exemption is embodied in IRS Publication 502, where it defines medical expenses as “costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body.” By this definition the medical expense costs will include any equipment or supplies that are needed for the treatment of the body. But the IRS document also clearly states that costs for the maintaining “general health” is not considered a medical expense. So if your use of the pool or spa is to treat a diseases that affect any part of your body or affects its functions then it can be considered a medical expense.
So what can you declare as a medical expense? Any special equipment or devices that you install in your house or any additions or improvements that you can justify as primarily for your medical care (or your spouse or dependents) can be considered a medical expense. Also included are costs to any permanent improvements where the effect is to further increase the real estate value of your property can be declared as a medical expense and you can get partial tax deductions for it. If the improvement does not increase your property’s value then you can claim a full tax deduction. You can ask for the services of an appraiser who will determine if your home improvements or equipment additions will increase your property’s value or not.
For additions like swimming pools or spas, you have show that these additions are specially equipped to address your specific health concerns. This is important because if you don’t show this, the tax authorities may see your swimming pool or spa as something that can also be used for leisure and this will make you ineligible for a tax deduction.
About The Author
Ryan is a tax writer who recently helped his parents renovate their home and has first-hand experience about medical expense tax relief.