Tax Deductions for Home Modifications
by Jane Hampton, CID
Dear Jane,
My daughter was injured over the summer in a car accident and now
uses a wheelchair for mobility. This past fall, we had to make many
structural changes to our home to accommodate the wheelchair. The
cost of modifications exceeded $75,000, and based on our income we
are not eligible for any grants or special funding programs. Are
there any tax incentives we can benefit from to recoup some of the
cost?
George
Duluth, MN
Dear George,
Your question comes at a very appropriate time as we say good-bye
to 2005 and begin the yearly grind of taxes! Both the Federal Government
and the State of Minnesota offer tax incentives for individuals
making accessibility modifications to their home.
Federal Income Tax
Costs incurred to implement
accessibility modifications in your home are an eligible medical
deduction on your Federal Income Tax under “Medical and Dental Expenses.” You
can deduct only the amount of medical and dental expenses that
is more than 7.5% of your adjusted gross income.
You can include in medical
expenses amounts you pay for special equipment installed in a home,
or for improvements, if their main purpose is medical care for
you, your spouse, or your dependent. The cost of permanent improvements
(such as an elevator) that increase the value of your property
may be partly included as a medical expense. The cost of the improvement
is reduced by the increase in the value of your property…the
difference is a medical expense. If the value of your property
is not increased by the improvement, the entire cost is included
as a medical expense.
Certain improvements made to make your home accessible thereby accommodating
a disability do not usually increase the value of the home and the
cost can be included in full as a medical expense. These improvements
include, but are not limited to, the following items:
• Constructing entrance or exit ramps for your home;
• Widening doorways at entrances or exits to your home;
• Widening or otherwise modifying hallways and interior doorways;
• Installing railings, support bars, or other modifications to
bathrooms;
• Lowering or modifying kitchen cabinets and equipment;
• Moving or modifying electrical outlets and fixtures;
• Installing porch lifts and other forms of lifts (but elevators
generally add value to the house);
• Modifying fire alarms, smoke detectors, and other warning systems;
• Modifying stairways;
• Adding handrails or grab bars anywhere (whether or not in bathrooms);
• Modifying hardware on doors;
• Modifying areas in front of entrance and exit doorways;
• Grading the ground to provide access to the residence.
Only reasonable costs
to make a home accessible accommodating a family member’s
disability are considered medical expenses. Additional costs for
personal motives, such as for architectural or aesthetic reasons,
are not eligible medical expenses.
Amounts you pay for operation and upkeep of a capital asset qualify
as medical expenses, as long as the main reason for them is medical
care. This rule applies even if none or only part of the original
cost of the capital asset qualified as a medical care expense.
Improvements to property rented by a person with a disability are
also an eligible medical expense. Amounts paid by the rentor to buy
and install special plumbing fixtures for a person with a disability,
mainly for medical reasons, in a rented house are medical expenses.
Example: John has arthritis
and a heart condition. He cannot climb stairs or get into a bathtub.
On his doctor’s advice, he installs
a bathroom with a shower stall on the first floor of his two-story
rented house. The landlord did not pay any of the cost of buying
and installing the special plumbing and did not lower the rent. John
can include in medical expenses the entire amount he paid.
To order Federal Tax forms, instructions, and publications call
the IRS at 1-800-829-3676; TTY 1-800-829-4059.
Call the IRS with your Federal tax questions at 1-800-829-1040;
TTY call 1-800-829-4059.
State of Minnesota Tax
Special
Purchase Refund Claim
In the State of Minnesota,
if you purchase a stair lift, ramp or elevator for installation at
a disabled person’s
principal residence, you may request a refund of the sales tax paid
if the item purchased is authorized by a physician. This refund also
applies to building materials used to install or construct these
items.
In order to claim the refund, you must fill out Minnesota Revenue
Form ST11P and attach:
• a physician’s prescription for the items purchased, and
• a copy of invoices showing sales tax paid.
For more information
on the State of Minnesota “Special Purchase
Refund Claim” go to: www.taxes.state.mn.us/forms/st11p.pdf or call the Minnesota Department of revenue at 651-296-6181; or TTY
at 711.
Although we have researched
and extracted information from the Federal and State websites, it
is always recommended you check with your tax accountant if you have
any additional questions.
I hope this information is beneficial to you.
Do you have a question
for Jane and Accessibility Design? We’ll
cover all of your questions in future issues of Home Access Answers.
Please contact us: 952-925-0301, www.accessibilitydesign.com, info@accessibilitydesign.com
Or contact Access Press
at 651-644-2133, or send an e-mail to: access@accesspress.org.
