Is a Swimming Pool Tax Deductible as a Medical Expense?

While a swimming pool is considered a personal expense, it can be deducted as a medical expense under specific Internal Revenue Service (IRS) rules. This deduction is not for general health or recreation but is reserved for instances where a pool is a medical necessity. Successfully claiming this deduction requires meeting strict qualification standards and maintaining detailed records.

Qualifying a Pool as a Medical Expense

The primary requirement for deducting a swimming pool’s cost is that it must be installed principally for the medical care of you, your spouse, or a dependent. The installation must be a response to a diagnosed medical condition for which hydrotherapy is a recognized treatment. A general suggestion from a doctor for more exercise will not suffice.

To meet this standard, you must have a written prescription from a physician that details the medical necessity. Conditions that may qualify include severe arthritis, osteoporosis, multiple sclerosis, or other musculoskeletal diseases that require water-based physical therapy. The IRS will scrutinize whether the pool is specially equipped for medical treatment, such as having hydrotherapy jets or modified stairs for accessibility.

If the pool is used for recreational purposes by family and friends, it undermines the claim that its primary purpose is medical. The IRS may also question the deduction if a reasonably accessible community pool could serve the same therapeutic purpose. You must be prepared to show that a private pool is specifically required for the treatment.

Calculating the Deductible Amount

The deductible amount involves two types of expenses: initial installation and ongoing operational costs. As a capital expense, you cannot deduct the full installation cost. The deductible amount is the total cost of the pool minus the amount it increases your home’s fair market value.

For example, if a pool costs $70,000 to install and a formal appraisal determines it increased your home’s value by $40,000, the deductible amount is $30,000. To establish this increase in value, you must obtain a formal appraisal from a qualified professional. If the improvement does not increase your home’s value, the entire cost could be included as a medical expense.

You can also deduct ongoing operational and maintenance costs for the time the pool is used for medical care. These expenses include chemicals, electricity for heating and filtration, and routine repairs. If the pool is used exclusively for the prescribed medical purpose, 100% of these maintenance costs can be included in your medical expense deduction.

These operational costs are deductible even if the initial installation did not qualify for a deduction because the increase in home value was equal to or greater than the cost.

The Adjusted Gross Income Limitation

After calculating the deduction for the pool’s installation and operational costs, the amount is subject to a limitation based on your income. Medical expenses are only deductible to the extent that their total exceeds 7.5% of your Adjusted Gross Income (AGI). This threshold applies to all your qualifying medical expenses for the year, not just the pool-related costs.

For example, if your AGI is $120,000, your 7.5% threshold is $9,000. If your total qualifying medical expenses, including the pool deduction, are $25,000, you can only deduct the amount that exceeds the $9,000 floor. Your actual medical expense deduction would be $16,000 ($25,000 – $9,000).

Because of the AGI limitation, you will not receive a tax benefit if your total medical costs for the year do not surpass the 7.5% floor. You must combine all unreimbursed medical expenses from the year to determine if you meet this threshold.

Documentation and Reporting Requirements

To claim a deduction for a swimming pool, you must maintain thorough documentation. The IRS requires specific records to substantiate your claim, including:

• A written prescription from a physician detailing the medical condition and the need for hydrotherapy.
• All invoices and receipts related to the pool’s construction and installation.
• A formal property appraisal from a certified appraiser showing the home’s value before and after the pool’s installation.
• Receipts for all ongoing maintenance costs, such as chemicals, electricity, and repairs.

These expenses are reported as an itemized deduction on Schedule A (Form 1040). Because this deduction can attract IRS scrutiny, having complete and organized records is necessary to defend the claim in an audit.