J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

17.13 Home Improvements as Medical Expenses

A disease or ailment may require the construction or installation of special equipment or facilities in a home: A heart patient may need an elevator to carry him or her upstairs; a polio patient, a pool; and an asthmatic patient, an air cleaning system.

Subject to the AGI floor(17.1), you may deduct the full cost of equipment installed for a medical reason if it does not increase the value of your property, as, for example, the cost of a detachable window air conditioner. Where equipment or home improvement increases the value of your property, only the cost in excess of the increase in value to the home may be treated as a medical expense. This increased-value test does not apply to certain structural changes to a residence made to accommodate a disabling condition, as discussed below. If the equipment does not increase the value of the property, its entire cost is deductible, even though it is permanently fixed to the property.

The expense of maintaining and operating equipment installed for medical reasons may be claimed as a medical expense. This is true even if some or all of the cost does not qualify for a deduction because it must be reduced by the increase in value to your home. For example, if a heart patient installs an elevator in his home on the advice of his doctor, but an appraisal shows that the elevator increased the value of the home by more than the cost of the elevator, the cost would not be a medical expense. However, ...