Maybe you’re not planning to move anytime soon despite the new homebuyer credit. As long as you’re staying put, you might decide to invest some money into the house. But you generally receive no current tax benefit from home improvements. The cost is simply added to your basis.
Strategy: Make home improvements needed for medical reasons. If certain requirements are met, you can deduct a portion of the cost this year. What’s more, you can write off additional upkeep and maintenance expenses year in and year out.
Of course, your annual medical deduction is limited to the amount of your qualified expenses above 7.5% of your AGI. Installing a medically necessary home improvement might push you over the 7.5%-of-AGI threshold for the year. And if you expect to clear this hurdle anyway, go for it—the extra deduction you’ll get is pure gravy.
Here’s the whole story: To qualify as a deductible medical expense, the cost mu...(register to read more)