Home Access Answers
Tax Deductions for
Home Modifications
by Jane Hampton
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. 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 2006 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: Medical & Dental
Expenses
Costs incurred to implement
accessibility modifications in your home are an eligible 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 a dependent. The cost of permanent improvements that
increase the value of your property (such as an elevator) may be
partly included as a medical expense. Take the cost of the improvement
and reduce it by the increase in the value of your property…the
difference is a medical expense.
In many cases, improvements
that make your home accesssible (accommodating a disability) will
not increase the value of the home; these costs can be included in
full as medical expenses. Such 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 renter 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. On
his taxes, John can include in medical expenses the entire amount
he paid.
Call the IRS with your federal
tax questions at 1-800-829-1040; TTY, 1-800-829-4059, or visit www.irs.gov.
To order federal tax forms, instructions, and publications, call
the IRS at 1-800-829-3676; TTY, 1-800-829-4059 or visit www.irs.gov/formspubs.
MN Sales 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, along with 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/taxes/forms/st11p.pdf or call the Minnesota Department of Revenue at 651-296-6181; or TTY
at 711 Minnesota Relay.
I hope this information
is beneficial to you. ![]()
Note: The information contained
in this article, extracted
from federal and state Web sites, is for general guidance only. You
should get appropriate professional advice on your particular circumstances,
because tax laws and regulations undergo frequent change.
Do you have a question for Jane?
We’ll cover all of your questions
in future issues of Home Access Answers. Please contact us at 952-925-0301,
www.accessibilitydesign.com, info@accessibilitydesign.com.
Jane Hampton, president of Accessibility Design, founded the company
in 1992 to enhance lives through design and project management. They
provide design, consultation, project management, and product recommendation
services specializing in home access for individuals with disabilities
at all stages of life.
