Filling out tax form 1040.
If you are paying to put a pool in at your home, you may be thinking about claiming it as an expense on your federal income taxes. You may have heard a story about someone claiming a pool in the past and the IRS allowing it. Some instances arise where the IRS may allow you to claim your swimming pool as an expense that you can write off. If you are just using your pool for recreational purposes with your family, you cannot claim the pool as an expense on your taxes.
Instructions
1. Get a letter from your doctor if you have been told that you need a pool for a medical reason. For example, if you have had a hip replacement and your doctor suggested you get a pool for your own physical therapy, it may be a valid deduction. In this scenario you could claim the pool as an expense because it relates to a specific medical condition, and it serves the purpose of mitigation, which is relief, and treatment. The IRS may argue that the pool can also be used for recreation purposes. To prevent this claim, do things like install special stairs to get into the pool that relate to your medical condition. The IRS policy on deducting a pool or other property as a medical expense is detailed in Publication 502. (See Resources below.)
2. Claim the pool as an expense for home improvement if you cannot meet the medical burden of proof. You cannot claim the entire amount of the pool but can only claim the difference between the cost and the value it adds to the home. For example, if the pool had a cost of $15,000 and added $10,000 in value to the home, you can only claim $5,000 as a home improvement expense.
3. Pay for the pool expense with a home equity loan or by refinancing your mortgage so that you can deduct the interest from the loan. To do this, the loan has to be used exclusively for remodeling the home or adding value to your home. You cannot deduct the cost of the pool, just the interest amount you pay on the loan.
4. Start a business that involves use of your pool so that you can partially deduct it as a business expense. For example, start a business offering swimming lessons in your neighborhood, and claim part of your pool as an expense on your taxes. The IRS will know that you are not using the pool for the business 100 percent of the time, so you must keep detailed records that show how often you use the pool for business. If it is 25 percent of the time, you can claim 25 percent of the pool as an expense on your taxes.
Tags: expense your, pool expense, expense your taxes, pool expense, pool expense your
