Tax Deduction on Lodging Expenses

Are costs of living in a retirement home or nursing home tax deductible?

You may deduct the full cost of living in a retirement home or nursing home for:

• yourself,
• spouse, or
• dependent

if the reason for being there is primarily because of the availability of medical care.

You cannot include in medical expenses these costs if the principal reason for being at the facility is personal.

Can I deduct home improvement expenses as medical expenses?

Home improvements that do not increase the value of your home but are required due to a medical condition are tax deductible. If the additions do increase the value of your home, only the amount over the increase in value is tax deductible.

Example:

If you have severe asthma and your doctor recommended that you add central air conditioning to your house. The equipment and installation costs $3,000. An appraiser assessed a $1,500 increase in the value of your home as a result of the air conditioning.

You can only deduct $1,500 which is the difference between $3,000 and $1,500 as a medical expense this tax year along with any cost of operating and maintaining the central air conditioning every year for as long as it is needed medically.