12 September 1995 External T.I. 9520655 - HOME RENOVATIONS AS A MEDICAL EXPENSE

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

home renovations as a medical expense

Position TAKEN:

deductible if reasonable

Reasons FOR POSITION TAKEN:

question of fact but his description of the modifications would appear to fit within the meaning of 118.2(2)(l.2)

A. Humenuk
XXXXXXXXXX		952065

September 12, 1995

Dear XXXXXXXXXX:

Re: Modifications to a Dwelling Place

We are replying to your letter of July 25, 1995 in which you ask whether a tax deduction is available in respect of modifications you plan to undertake to make your home more accessible to your disabled son.

As discussed with you by telephone on August 29, 1995 (XXXXXXXXXX\Humenuk), the comments which follow do not constitute an advance income tax ruling and are not binding on the Department in respect of any particular expense which may be incurred in respect of the proposed modifications.

You describe your home as an older home with narrow hallways on the second floor which do not permit access by wheelchair. Until now, you have carried your disabled son to his bedroom on the second floor; however, this is no longer practical and you intend to install a wheelchair lift which will connect the main floor to the second floor and the basement. The proposed design is the most practical, if not the only way, of renovating this particular house to accommodate your son. City bylaws preclude you from installing a lift on the side of the house and since the basement is at ground level at the back of your house where the lift is to be installed, the lift will also provide wheelchair access to the house.

The modification will include extending the driveway to the back of the house where the lift is to be located and dismantling the system of ramps currently in use. Because the second floor hallways are too narrow to accommodate a wheelchair, the disabled child's bedroom at the side of the house will be exchanged with his brother's at the back. The bedroom for your disabled son will be enlarged and a bathroom suitable for his needs will be installed. The installation of the elevator will eliminate 500 square feet of the house so that the additional 1000 square feet added by the modifications will enlarge the overall living space of your home by 500 square feet. The additional living space is comprised mainly of the wheelchair accessible bathroom.

As stated in paragraph 56 of the attached Interpretation Bulletin IT-519R "Medical Expense and Disability Tax Credits and Attendant Care Expense Deduction", reasonable renovation expenses may be claimed as a medical expense in the circumstances you describe. It is a question of fact as to whether any particular expense is reasonable in the circumstances and whether it was incurred for the purpose of enabling the disabled individual to gain access to or become mobile and functional within a dwelling. Nevertheless, on the basis of the facts presented, it is our view that amounts paid in respect of the installation of the wheelchair lift and the addition would fall within the wording of paragraph 118.2(2)(l.2) of the Act as long as the amounts are reasonable. Provided that the cost of dismantling the ramps presently in place is necessary and integral to the other modifications, such costs would be eligible as well. However, the cost of removal of the ramps for cosmetic reasons or because they are no longer necessary would not itself qualify as a medical expense.

Eligible medical expenses are not deductible in computing taxable income but rather are used in the calculation of the medical expense tax credit as described in paragraph 12 of the bulletin. The medical expense tax credit is applied to reduce tax otherwise payable. In our conversation of August 29, 1995 (XXXXXXXXXX\Humenuk), you also asked whether the amount of the expense may be split between you and your wife for the purpose of calculating your respective medical expense tax credits and whether any unused portion of the credit is available to be carried over to another taxation year.

While the medical expenses which are eligible to be used in the calculation of an individual's medical expense tax credit are limited to expenses paid by that individual, the Department recognizes that spouses may act as agents for each other in respect to the payment of personal expenses and is prepared to accept an allocation of the amounts paid by each spouse for the purpose of calculating the medical expense tax credit of each of them.

While there is no provision for a carry over of the unused portion of a medical expense tax credit, the medical expense tax credit for any particular year can be calculated with reference to expenses paid in any 12-month period ending in the year to the extent that the expenses were not used in calculating the individual's medical expense tax credit for a previous year. Please note that if the costs of renovations are financed by a loan, the expense is considered to have been paid at the time the proceeds of the loan are used to pay for a particular expense rather than at the time the loan is repaid.

As an additional note, we draw your attention to paragraphs 67 and 68 of the bulletin concerning other important information relating to the eligibility of a particular expense. If you, your spouse or your son are entitled to be reimbursed for any portion of the costs of the renovations, the amount eligible to be claimed as a medical expense will not qualify as an eligible expense unless it is required to be included in income. This would include any amount receivable under a provincial assistive device program or a private insurance plan.

The above comments have been made on the basis of the information provided to us. Please note that it would be necessary to review the relevant documentation such as invoices and construction contracts in order to make a final determination as to whether any particular cost falls within the wording of paragraph 118.2(2)(l.2) of the Income Tax Act. Such a determination is made at the local Tax Services office.

We trust our comments will be of assistance to you.

Yours truly,

P.D. Fuoco
for Director
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch