A capital improvement to your home may be partially tax-deductible, if it is made to alleviate a specific health condition. For example, suppose your doctor tells you to install central air conditioning to help you cope with asthma, allergies or respiratory problems. You spend $35,000 installing the system.
A local real estate broker might provide a letter saying that your house, which was worth $200,000 previously, is now worth $225,000 as a result of the improvement. Because you spent $35,000 and your house appreciated by $25,000, you can use the other $10,000 as an itemized medical deduction.
Such an expense may put you over the 7.5 percent threshold for deducting medical expenses. What’s more, ongoing operation and maintenance expenses also may qualify as medical expenses. Be sure to get a written recommendation from your doctor, stating the reasons the improvement was necessary (not just desirable) to treat a specific condition, along with thorough before-and-after real estate appraisals.