Many physicians don’t have the time to do their own tax returns. If you have an accountant do your personal taxes, he or she will, hopefully, capture all the tax deductions and tax credits that are available to you.
But you want to have at least an awareness of the deductions and credits that you’re eligible for. If your accountant fails to ask, you could miss out on tax savings.
A relatively new one is the home accessibility tax credit, introduced by the federal government for the 2016 tax year. This tax credit helps to make homes safer and more accessible for people with disabilities (eligible for the disability tax credit) and the elderly (age 65 or over).
Accessibility renovations include grip bars, wheelchair ramps
Let’s take a fictitious couple—Dr. Eleanor Giroux*, a family physician, and her husband, Stephen, both in their late 50s. The couple had planned to retire early and travel extensively. Unfortunately, Stephen was recently diagnosed with ALS, or Lou Gehrig’s disease. They’re devastated by this diagnosis and will need to rethink their retirement plans.
In the shorter term, they will need to renovate their home to accommodate Stephen’s expected decline in mobility. They will likely need to widen their doorways for a wheelchair, build a wheelchair ramp up to their front door, and install a walk-in bathtub and grip bars.
Either Eleanor or Stephen can claim the home accessibility credit. Because it’s a tax credit (rather than a tax deduction), it is worth the same in tax savings regardless of who makes the claim. It is available to either the qualifying individual (the person with the disability or a person over 65), the spouse or another eligible individual.
Maximum claim in one year is $10,000
Eleanor and Stephen expect to spend about $15,000 in renovations. However, they can only claim $10,000 in eligible expenses in one year, which translates to $1,500 in tax savings. They considered doing the renos in two stages over two tax years, allowing them to claim the whole $15,000, but they decided that time is of the essence.
Note that to claim this credit, the dwelling renovated must be the couple’s principal residence. If for some reason Eleanor and Stephen move during the year, they would have two different principal residences during one tax year—but that doesn’t mean they could claim $10,000 in accessibility renovations on each home. Their total eligible expenses cannot be more than $10,000 in a single tax year.
The government lists a number of expenses that you can claim and ones that you cannot. Essentially, you can claim renovations that make it easier for the person to gain access to the dwelling and be mobile inside it, and renovations that reduce the risk of harm to the person.
If you do the renovations yourself, you can claim the cost of building materials, fixtures, equipment rentals, building plans and permits. You cannot claim your labour costs or tools.
If you hire an electrician, plumber, carpenter or architect, you can claim these expenses.
Double up: Renovations can be medical expenses, too
Another good thing about Eleanor and Stephen’s renovation expenses is that they can also qualify as medical expenses. The same expense can be claimed under the home accessibility tax credit and as a medical expense. Unlike the home accessibility credit, there is no upper limit to medical expenses.
For the 2018 tax year, a person can claim a 15% federal non-refundable tax credit on qualifying medical expenses that are more than either $2,302 or 3% of your net income, whichever is less.
If you think you qualify, talk to a tax professional to make sure you’re claiming the home accessibility tax credit and eligible medical expenses. Be sure to take advantage of all the tax benefits available to you.
* The hypothetical case study is for illustrative purposes only and does not represent actual clients. Any resemblance to actual people or situations is purely coincidental.