It’s no secret that most people have to pay, at least in part, for home modifications out of their own pocket. While remaining in your home as you age is a good way to save money in the long-term, it can cost quite a bit depending on your needs. The good news is, the IRS is willing to help!
As of January 1, 2013 the IRS will let you deduct medical expenses that exceed 7.5% of your adjusted gross income if you are over the age of 65. If you’re under the age of 65, you can deduct medical expenses that exceed 10% of your adjusted gross income. You can refer to publication 502, Medical & Dental Expenses, for additional information on these types of deductions (for more information visit IRS.gov/Pub502).
At this point you may be wondering which medical expenses are actually deductible. Below are a few common items that generally qualify as medically deductible:
- Ramp installation
- Installation of vertical lifts
- Stair modifications (i.e. reinforcing hand rails)
- Widening of doorways
- Smoke and fire alarm installation or improvements to existing systems
- Lowering of kitchen and bathroom cabinets
- Grading of the ground for easier home access
Although some of these modifications will likely increase the value of your home, resulting in an increase in your tax rate, the IRS is usually willing to forgive the rate hike if the modifications are medically necessary. Just be sure to get a Letter of Medical Necessity from your doctor as supporting documentation.
Paying for home modifications so you can age in place safely and comfortably can be expensive, but there is some relief available via the IRS, believe it or not. As always, it’s best to consult your tax advisor or a CPA to determine what tax credits and deductions you’re actually eligible for. Additionally, you can always contact the IRS directly, (800) 829-1040, if you have any questions.