Roberto suffers from emphysema and severe allergies and,upon the recommendation

Question

Roberto suffers from emphysema and severe allergies and,upon the recommendation of his physician, has a dust eliminationsystem installed in his personal residence. In connection withsystem, Roberto incurs and pays the following amounts during thecurrent year:

Doctor and hospital bills $1,600

Dust elimination system 8,800

Increase in utility bills due to they system350

Cost of certified appraisal 220

The system has an estimated useful life of 15years. The appraisal was to determine the value of Roberto’sresidence with and without the system. The appraisal states thathis residence was worth $125,000 before the system was installedand $127,500 after the installation. Roberto’s AGI for theyear was $50,000. How much qualifies for the medical expensededuction in the current year.

Explanation / Answer

1. Enter the amountyou paid for the home improvement 2. Enter the valueof your home immediately after the improvement* 3. Enter the valueof your home immediately before the improvement.* 4. Subtract line 3from line 2. This is the increase in the value of your home due to home improvement.

• If line 4 is more than,or equal to, line 1, you have no medical expenses due to the homeimprovement. Stop here.
• If line 4 is less than,or equal to, line 1, go to line 5.

If line 4 is more than,or equal to, line 1, you have no medical expenses due to the homeimprovement. Stop here. If line 4 is less than,or equal to, line 1, go to line 5. 5. Subtract line 4from line 1. These are your eligible medical expenses due tothe home improvement. 5. Subtract line 4from line 1. These are your eligible medical expenses due tothe home improvement. The work sheet above is for capital medical expenses: :
1 8800 2 127500 3 125000 4     2500 5 6 6300 :
so we can deduct $6300 as a medicalexpense: : amounts you pay for the operation and upkeep of a capitalasset quality as medical expenses, as long as the main reason for this is medical. so the 350 is and expense :
the other medical expenses are 1600+750=2350 :
I am not totally sure about the cost of appraisal but I believesense it was necessary to determine the amount of capital assetdedution that it too would qualify as a medical expense.....so220 : 50000(.075)=3750is our floor so any amount above this is deductible :
$6300+350+2350+220=9220 :
9220-3750=$5470 is deductible whenitemizing in the current year 1. Enter the amountyou paid for the home improvement 2. Enter the valueof your home immediately after the improvement* 3. Enter the valueof your home immediately before the improvement.* 4. Subtract line 3from line 2. This is the increase in the value of your home due to home improvement.

• If line 4 is more than,or equal to, line 1, you have no medical expenses due to the homeimprovement. Stop here.
• If line 4 is less than,or equal to, line 1, go to line 5.

5. Subtract line 4from line 1. These are your eligible medical expenses due tothe home improvement.

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