Using tax deductions from the cost of your remodel requires good planning and record keeping.
During our planning stage, I found a list of accessibility changes which are tax deductible. The full publication can be found at:
The list included the following:
– Entrance or exit ramps
– Handrails or grab bars
– Railings, support bars or other modifications to bathrooms
– Lowered or modified kitchen cabinets and equipment
– Moved or modified electrical outlets and fixtures
– Porch lifts and other lifts
– Widened doorways at entrances or exits
– Widened or modified hallways and interior doorways
– Modified stairways
– Modified hardware on doors
– Modified areas in front of entrance and exit doorways
– Ground grading to provide access to the residence
When our remodel was close to being finished, I used that list to create a personal list of changes made to the house and asked our contractor to fill in the amounts for those changes. It looked like this:
Page 7 in the publication shows a chart to figure out how much the changes increased the value of your home. Deductions can be made only on the amount that did not increase the value of your home (pages 18-20 in link above). We had taken “before” movies and pictures. When the project was completed, I asked our realtor to do a market analysis. I showed her the “before” movies and pictures and then took her on a tour of the “after”. She wrote us a letter indicating the values of both our before and after. From that, we calculated the increase in value and deducted it from the cost of the remodel, leaving us with the amount we could use for tax deductions. Taxes were filed and sent in with no problem; but had we been audited, we would have had plenty of paperwork to back up our numbers. The deduction was well worth the trouble.
I also kept track of everything purchased that was energy efficient and had our contractor fill in the blanks for the cost of those items. I gave instructions to the contractor to be sure to leave stickers on items or to give them to me when removed. That list looked like this:
Always keep track of purchases for mobility equipment, adaptations to dwellings and medical care and check IRS publications to guide you when preparing your tax returns (or take your labeled receipts in if someone else is doing the preparation).