A disability can make it difficult for you or a loved one to get around safely at home and perform regular daily activities. Some modifications can make it possible to live comfortably at home and might also save you money when you file your taxes.
Types of Home Improvements That Might Reduce Your Tax Bill
The Internal Revenue Service allows taxpayers to deduct expenses or receive tax credits for home upgrades that are directly related to a disability. Each individual’s circumstances are different. A home modification that is medically necessary for one person might not be medically necessary for another.
If, for example, you have trouble walking and you have to start using a wheelchair, you might need to install a ramp leading to the front door and widen some of the doorways in your house to get a wheelchair through. You might also have to modify your bathroom, lower kitchen countertops to cook while seated in a wheelchair, and install a stairlift to access the second floor in the house.
If home improvements are medically necessary, you will be able to list them on your tax return and reduce your tax liability. You will need to have a documented disability or medical condition, and the upgrades you make will have to be directly related to your condition. If you make changes for aesthetic reasons or for another non-medical purpose, that won’t reduce your tax bill.
You will only be able to reduce your tax liability if you pay for expenses out of your own pocket. If your health insurance company covers the cost of home upgrades, you won’t be able to claim them when you file your taxes.
Changes that you make for someone else’s benefit might reduce your tax burden. For instance, if you pay for home improvements to make your house more accessible for a disabled parent, you might be able to save money when you file your tax return.
How Accessibility Improvements Can Affect Your Taxes
The cost of home improvements as a percentage of your adjusted gross income will be important when filing your taxes. Under some circumstances, it might make more sense to take the standard deduction than to itemize your deductions.
If you have questions about how making your house more accessible might impact your tax liability, consult your accountant. Explain your or your family member’s disability or medical condition, describe the home improvements that you’re thinking about making, and discuss whether they would be deemed medically necessary. Keep receipts for all expenses related to those projects and give them to your accountant to use when preparing your taxes.