Money that you spend on property may be deductible as medical expenses on your personal federal income tax form. These expenses can include personal property, like medical equipment, or changes made to your home due to a medical condition. In order to be deductible, the money must be spent primarily for the prevention or treatment of a specific illness. The total expenses must also exceed 7.5% of your adjusted gross income.

Requirements

If you're a taxpayer and you spend money on medical care, these expenditures may be deductible under IRC § 213(a). You must meet the following requirements:

  • You spent the money on medical care for yourself, your spouse or your dependents
  • You didn't receive reimbursement for the expenses, such as from your insurance company
  • You spent the money during the taxable year
  • The expenses add up to more than 7.5 percent of your adjusted gross income (AGI)
  • For alternative minimum tax purposes, the expenses must exceed 10 percent of your AGI

Money spent on medical care means any amounts paid for the diagnosis, treatment or prevention of disease. It also means money spent for the purpose of affecting any structure or function of the body. Allowable expenses include:

  • Essential transportation for medical treatment
  • Long-term care
  • Health insurance premiums
  • Drug and doctor fees
  • Lodging expenses incurred in order for you to receive medical treatment

In addition to the expenses mentioned above, you may be able to deduct the cost of property that you buy for medical reasons. These costs must be incurred primarily for the prevention or treatment of a specific illness or defect. So, for example, the cost of equipment, home renovations and even a spa or pool may be deductible as medical expenses. However, make sure that you comply with the legal requirements for taking the deductions.

Expenditures on Property

Money spent on personal property which is related only to the ill person and is not related to the permanent improvement of property is deductible if it is otherwise deductible as a medical expense. Examples of this include the cost of eye glasses, a seeing eye dog, artificial limbs or a wheel chair.

Money spent for the permanent improvement of real property, usually your home, may qualify as a medical expense to the extent that the cost exceeds the increase in the value of the related property. The cost also must be related directly to medical care. For example, your wife's doctor advises you to install an elevator in your home so that your wife, who has heart disease, does not have to climb the stairs. If the cost of installing the elevator is $10,000 and the increase in the value of your home is only $3,000, the difference of $7,000 is deductible as a medical expense. If the elevator doesn't increase the value of your home at all, the entire $10,000 is deductible, subject to the 7.5% floor.

If you must make an improvement to your home because of a family member's medical condition and you take a deduction for it, you must be able to substantiate your deduction. You will need a doctor's written prescription for the improvement. You will also need an independent appraisal of your property both before and after the improvement is made. Attach copies of these documents to your federal tax form.

You can also deduct the cost of operating and maintaining property if the primary reason for those costs is the medical care of yourself or a family member. The medical condition must continue to exist for you to take the deduction on an ongoing basis.

In order for the cost of a swimming pool to be deductible as a medical expense, two things must occur. First, the primary purpose of the pool must be the treatment of a disease or physical defect. Second, there must be no adequate less expensive alternative available.

If you have questions about the deductibility of the cost of property as medical expenses, contact a tax lawyer in your area.

Questions for Your Attorney

  • If I have to buy an air conditioner for my daughter because she has asthma, is the cost of the air conditioner deductible?
  • If I install a whirlpool in my home to treat my medical condition, can my kids use it without affecting my tax deduction?
  • Is the cost of removing improvements which I made to my home for medical reasons tax deductible?