In the U.S., more than 24 million people (1) provide unpaid care for older adults. Adult children are the primary family caregivers, accounting for about 41% of those providing care. This can cause both personal and financial stress on families.
Let’s pretend, for example, that Lacey has been helping out her parents, including by renovating the family home to ensure her parents can age in place despite their growing list of medical conditions, including arthritis that has made it very difficult for her mother to walk upstairs.
Must Read
Lacey has now spent over $200,000 renovating the family home, including adding an elevator, widening doorways to make rooms more accessible, creating an accessible bathroom, and adding wheelchair ramps.
Lacey now wants to know if she can claim her purchases a tax deduction. Unfortunately, the answer to that is more complicated than she’d like.
Providing other support may matter
The key question determining whether Lacey can deduct the money she spent is whether she provided more than half of her parents’ total support beyond just the home upgrades.
“When the grown children are upgrading their parents’ house, they may claim deductions if the parents are qualifying relatives,” Steven Conners (2), founder and president of Conners Wealth Management, told MoneyWise. Conners explained that over 50% of their total support needs must come from Lacey as qualifying support.
Lacey can also claim her parents as dependents (3) on her tax return if they have a gross income below the IRS limits, which is $5,200 in 2026. The parents also must be U.S. citizens or resident aliens. Social Security income usually doesn’t count in this calculation. This may offer additional tax savings, regardless of any medical expenses or home improvement costs she pays.
However, her parents don’t need to be dependents for her to claim a deduction for her spending on their medical expenses as long as they are qualifying relatives for the medical deduction. This can happen if she provides more than half their support but can’t claim them as dependents because they have too much income of their own.
She must also itemize on her taxes as well, as you can’t claim a medical expense deduction along with the standard deduction.
The types of expenses matter
The next big question is what types of expenses Lacey incurred.
First and foremost, they must clearly be connected to their medical needs. “They also should have a physician’s note for their files, suggesting this is qualifying support for their disabilities,” Conners explained.
The IRS also details what kinds of renovation expenses (4) are deductible, including things like widening entrance and exit doors, adding handrails, lowering or modifying cabinets, and installing lifts.
The total qualifying medical expenses that Lacey paid (including the renovations and any other qualifying care costs) must also have been significant, adding up to at least 7.5% of Lacey’s adjusted gross income.
Did the improvements add value?
Finally, Lacey will need to consider whether the changes added value to the home, in which case, she must reduce the deduction based on the value added.
An elevator is one example. Since an elevator would typically raise the amount a home sells for, Lacey would need to reduce the deduction by the amount that it increases equity.
Since the rules are so complicated, Conners advised getting professional advice on this issue. “A Certified Public Accountant should review this first to make certain it is going to pass muster in the event of an audit,” he said.
But, the good news is, it looks like Lacey probably has the opportunity to deduct at least some of what she spent, as long as she itemizes on her taxes and was also providing her parents with a substantial amount of other financial support as well.
You May Also Like
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines.
Population Reference Bureau (1); Conners Wealth Management (2); Internal Revenue Service (3); Nolo (4)
This article originally appeared on Moneywise.com under the title: I spent $200K upgrading my elderly parents’ home — here’s what the IRS actually lets me deduct
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: finance.yahoo.com
