Client wants to claim medical deduction for modification of vacation home

[Nomotaxes]

Client spent $16,000.00 remodeling bathroom of vacation home to make it more accessible for adult disabled child who lives with them. If this was for the primary home, I would have no concern.  Since expense is for a vacation home, I have significant doubt as to deductibility. Pub 502 only refers to "the home" and makes no other distinction, but I feel it is implicit that the reference is to a main home.  Client says they spent 17 weeks at the vacation home last year, a month over a quarter of the year.  Still it seems that for a Sched A  Medical Deduction, modifications would have been needed to be done to the primary residence.  Seems that the expense would more be a cost added to basis of property. Yea or nay? Guidance on this matter is appreciated.

[Terry D EA]

Here is what I found in Pub 502. It does say if you make capital expenses of "a home" and does not say anything about primary residence only. If I find anything else I'll post it.

Capital Expenses

 

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 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 isn't increased by the improvement, the entire cost is included as a medical expense.

[DANRVAN]

9 hours ago, Nomotaxes said:

. Pub 502 only refers to "the home" and makes no other distinction, .

 Reg 1.1213-1(e)(1)(iii) is the authority, it refers to "capital expenditures" for medical purposes. It doesn't say anywhere that the capital expenditure must relate to your personal residence. Capital improvements to make a vehicle handicap accessible and to allow a handicapped person to operate it are also deductible.  The purpose of the improvement must be for medical and not personal purposes.  If the improvements on the vacation home were made to allow access by a handicapped person and not for the personal enjoyment of the whole family, then they should be allowed.

 

[Nomotaxes]

Thanks all!  I appreciate the response.  Instinct leads me to feel that the primary home is the focus. However, from my prior reading as well as yours, there is nothing explicitly written stating the home must be the primary residence.  

[ILLMAS]

On 2/13/2017 at 4:26 PM, Nomotaxes said:

Client spent $16,000.00 remodeling bathroom of vacation home to make it more accessible for adult disabled child who lives with them. If this was for the primary home, I would have no concern.  Since expense is for a vacation home, I have significant doubt as to deductibility. Pub 502 only refers to "the home" and makes no other distinction, but I feel it is implicit that the reference is to a main home.  Client says they spent 17 weeks at the vacation home last year, a month over a quarter of the year.  Still it seems that for a Sched A  Medical Deduction, modifications would have been needed to be done to the primary residence.  Seems that the expense would more be a cost added to basis of property. Yea or nay? Guidance on this matter is appreciated.

Will the bathroom remodeling increase the value of the vacation home?

[Nomotaxes]

No appraisal was done, client has not provided any receipts or contractor statement after several requests, so skipping this as a deduction.

[DANRVAN]

On ‎02‎/‎14‎/‎2017 at 3:33 PM, ILLMAS said:

Will the bathroom remodeling increase the value of the vacation home?

There are certain improvements that do not increase the fmv of the house. My guess is the $16,000 include more than what is on the list.

 

Rev. Rul. 87-106, 1987-2 CB 67 -- IRC Sec(s). 213

• 1. constructing entrance or exit ramps to the residence;
• 2. widening doorways at entrances or exits to the residence;
• 3. widening or otherwise modifying hallways and interior doorways;
• 4. installing railing, support bars, or other modifications to bathrooms;
• 5. lowering of or making other modifications to kitchen cabinets and equipment;
• 6. altering the location of or otherwise modifying electrical outlets and fixtures;
• 7. installing porch lifts and other forms of lifts (Generally, this does not include elevators, as they may add to the fair market value of the residence and any deduction would have to be decreased to that extent. See section 1.213-1(e)(1)(iii) of the regulations.);
• 8. modifying fire alarms, smoke detectors, and other warning systems;
• 9. modifying stairs;
• 10. adding handrails or grab bars whether or not in bathrooms;
• 11. modifying hardware on doors;
• 12. modifying areas in front of entrance and exit doorways; and
• 13. grading of ground to provide access to the residence.

 

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