Are Swimming Pools Tax Deductible?
Wouldn’t it be nice to build a brand new pool and then write it off as a tax deduction? Sure, it would be very nice. Would doing so get you audited? Possibly. But 4 million out of 160 million Americans did so last year and the average deduction was about $22k. So let’s talk about it!
Can You Write a Swimming Pool Off?
Unfortunately, the average American can most likely not write their swimming pool off. Why? Because the tax code individuals use to do so under section 213 is reserved for medical expenses. If you incur medical expenses that are not covered by insurance and are not reimbursed you can sometimes write those expenses off. So, if the primary purpose for your pool is for medical care, then yes, you are allowed to write the construction costs off. Even if you are eligible to write your pool off, it’s a relatively complex process and the tax deductions may or may not be worth it based on your circumstances. It’s best to speak to a tax professional or your CPA before you start digging holes in your backyard!
Things to have in order:
You’ll need verifiable proof from a physician that pool therapy is necessary for your treatment.
You’ll need to have an appraisal both before and after the construction of the pool. If the pool increases the value of your home you are required to subtract the difference from the deduction.
You must itemize your deduction on Schedule A. Only 10% of tax filers use Schedule A, so you likely won’t be familiar with this. You CANNOT take the standard deduction, which most people are already used to. You can only deduct expenses greater than 7.5% of adjusted gross income. So if your household income is $100k, you won't be able to deduct the first $7,500 of expenses.
Flexible Spending Account
You can also use an FSA for pool construction costs and reimbursements. This means you’re using dedicated non taxable income to pay for your pool! You’ll just need a Letter of Medical Necessity.
How it Got Started?
Cherry v. Commissioner
Herbert Cherry had a chronic lung disease and was instructed by his physician to undergo pool therapy. He tried alternative exercises, but swimming seemed to help the most. His local pool wasn’t open year round and the pool's operating hours did not meet his schedule, so he needed to have his own pool. The expense was originally denied by the IRS because the pool did not have any specialized medical equipment. In fact, it seemed more like a personal use pool considering it had a diving board and wasn’t olympic shaped! Not only did Cherry deduct the pool, but his construction company completed the work and received the proceeds. It was also found that Cherry’s sons had several pool parties there - which did not help the medical argument. However, Cherry sued and ultimately won the case.
Should You Try to Deduct a Pool on Your Taxes?
Again, before you start excavating a giant hole in your backyard, speak to a tax professional. This is not a simple line item deduction and requires serious consideration to see if the benefits outweigh the cons. If you have a medical illness or ailment that requires a swimming pool, this could be a great opportunity for you though!
“Can You Write off a Pool on Your Taxes?” Www.youtube.com, www.youtube.com/watch?v=Sk4bK0EkDZ0. Accessed 8 May 2023.
“Swimming Pools as Tax Deductions? How Large Medical Expenses Can Qualify | Your Money Briefing | WSJ.” Www.youtube.com, www.youtube.com/watch?v=uIu9ipP-0n8. Accessed 8 May 2023.
“Swimming Pool | FSA Store.” Shop All Swimming Pool Products from FSA Store. FSA Store Is Your One-Stop-Shop for Flexible Savings Accounts Where You Can Buy FSA Eligible Swimming Pool Products., fsastore.com/fsa-eligibility-list/s/swimming-pool. Accessed 8 May 2023.
“Cherry v. Commissioner T.C. Memo 1983-470 (T.C. 1983).” Https://Www.bradfordtaxinstitute.com/, www.bradfordtaxinstitute.com/Endnotes/TC_Memo_1983-470.pdf. Accessed 8 May 2023.