Does your parent or other elderly relative reside in a condo or co-op?
Don’t overlook potential tax deductions for the cost of certain improvements to the premises. A condo or co-op dweller may qualify for medical deductions. After all the expenses are added up, only the amount above an annual threshold is deductible. This is an itemized deduction that can’t be claimed if the elderly person claims the standard deduction. Currently, you can deduct unreimbursed medical expenses to the extent the total for the year exceeds 7.5% of adjusted gross income. To qualify as a deductible medical expense, IRS regulations say that the cost must be incurred primarily for the prevention or alleviation of a physical or mental defect or illness. The list of qualified expenses goes beyond typical doctor and dental visits and hospital stays. It also includes payments for medically-prescribed home improvements or the installation of special equipment in the taxpayer’s unit. How much of the cost of the improvement is deductible? If the elderly person is a tenant, they can write off the entire cost if they are already above the annual 7.5%-of-AGI threshold. However, for condo or co-op owners, the deductible amount is reduced by any related increase in the place’s value. Note that any operating or maintenance costs associated with the improvements are also deducible.