If you or a loved one has a medical condition that requires a swimming pool for therapy, you may be able to claim the cost of constructing a pool as a medical tax deduction. Many Americans are unaware of this tax break, which can also apply to other medical expenses such as assistant medical equipment.
Using a Swimming Pool as a Tax Deduction
Aaron Rogers, owner of Southern Poolscapes, recently informed a customer that they could claim part of their pool construction as a medical expense deduction on his taxes. “He built the pool to use for therapy after a recent spinal fusion,” said Rogers, “as we tallied the bill up he mentioned, ‘Boy, I wish I could claim this on my taxes’, and that’s when I mentioned it to him.”
Rogers claims it isn’t the first time he’s seen someone do this but because his customer had all the right paperwork, a good portion of her swimming pool was tax deductible. “All in, I believe his net deduction came close to $50,000,” said Rogers, “in some instances, if it is doctor-recommended, the IRS allows it.”
Medical Deduction for Swimming Pools & Spas
For example, therapy pools, spas, and other similar facilities that are recommended by a doctor can be eligible for the medical tax deduction. Additionally, if you need assistant medical equipment such as a chair lift, safety rails, or other modifications to the pool, these costs can also be claimed as part of the deduction.
Installing a swimming pool or hot tub at home can be recommended by a doctor for various medical conditions, such as osteoporosis, multiple sclerosis, arthritis, and chronic pain. Pools are also commonly used for physical therapy, particularly in cases where a person is unable to bear their full weight on a leg or other part of their body.
How You Claim Your Pool as a Tax Write-Off
Moreover, if you build a pool for medical reasons, it can make sense to claim the tax deduction. Building a pool can be a significant expense, but if it’s recommended by a physician, the deduction can help offset some of the costs. Plus, having a pool can provide a therapeutic benefit to the individual with the medical condition, improving their quality of life.
However, it’s important to note that there are some limitations to the medical expense deduction. Firstly, you need to itemize deductions on Schedule A, rather than taking the standard deduction. Additionally, eligible expenses must be above 7.5% of adjusted gross income (AGI) to qualify for the deduction. For example, if a couple has an AGI of $200,000, they can only deduct eligible medical expenses above $15,000.
Who is Eligible?
Based on the latest IRS data, in 2020, approximately 4 million tax filers claimed medical expenses as a deduction on their Schedule A. This is in contrast to the approximately 12 million filers who claimed mortgage interest and the approximately 13 million filers who claimed charitable donations. Despite this, the average medical expense deduction was approximately $20,000, indicating that this deduction was particularly valuable for those who qualified and likely came at a time when any tax relief was greatly appreciated.
Even if a taxpayer’s medical expenses don’t exceed the deduction threshold, it’s still important to understand what expenses qualify for the deduction. This is because the same expenses that are eligible for the deduction can also be reimbursed through a Flexible Spending Account or Health Savings Account, without the requirement of meeting the 7.5% AGI threshold.
Claiming a Medical Expense Deduction for your Pool
To claim the medical expense deduction, you will need to keep good records and documentation of all expenses related to the construction of the pool or other medical expenses. The IRS provides a comprehensive list of eligible medical and dental expenses in Publication 502, which includes costs related to the diagnosis, cure, mitigation, treatment, or prevention of disease. Examples include bandages, guide dogs, nursing homes and assisted living care, and special-education tuition.
In at least one case, the IRS did not allow a taxpayer to deduct installation costs for his pool because the taxpayer did not have sufficient medical documentation to support his claim. The taxpayer only provided a statement from his doctor advising him to lose weight, but this alone was not enough to qualify for the medical expense deduction. It’s important to have proper documentation and meet all the requirements set by the IRS to avoid being denied the deduction.
The IRS has an extensive list of tax-deductible home improvement expenses that are eligible for a medical deduction. While constructing a swimming pool would be considered a capital expense, it could still be considered for a medical deduction.
When claiming a medical deduction for expenses that add permanent value to a home, such as a swimming pool, the taxpayer is required to obtain an appraisal of the increase in the home’s value as a result of the modification. The amount of the deduction must then be reduced by the appraised value increase. This is to prevent taxpayers from claiming a deduction for expenses that are not directly related to their medical condition.
Originally posted by Pool Magazine.
