Costs for shower renovation
Current the Baden-Württemberg tax court recognised the costs for converting the shower in full as extraordinary expenses in accordance with § 33 EStG, although a reasonable burden must be deducted. The costs for materials and labour are medical expenses as they directly alleviate an illness (FG Baden-Württemberg, 19.3.2014, 1 K 3301/12).
The case: A single lady suffers from multiple sclerosis and has a disability degree of 50. A care level has (not yet) been certified. She has the shower in her home converted to be disabled-friendly: The shower tray is removed and a floor-level shower element is installed, the fittings are renewed, the shower cubicle is re-tiled and fitted with a door. The shower is then accessible at floor level and wheelchair accessible.
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The tax court did not deduct any value for the new shower. According to the new BFH case law, in the case of disability-related modifications, the expenses are so strongly justified by the compulsion of the disability "that the acquisition of any value is of secondary importance in view of the overall circumstances" (BFH ruling of 24.2.2011, BStBl. 2011 II p. 1012).
Furthermore, a marketable advantage is also disregarded: "A value that is based solely on the possible use of the modifications by non-disabled family members is not a real value and is therefore unsuitable to justify a prohibition on deduction" (BFH ruling of 22.10.2009, BStBl. 2010 II p. 280).
Costs for shower renovation
Costs for installing a lift
Previously non-deductible – now recognised for tax purposes
For a long time, the costs for the installation of a lift or construction of a lift tower in a private home were not recognised as extraordinary expenses. The tax authorities argued that such building measures were value-enhancing and could also be used by non-disabled individuals.
However, this has changed.
New BFH case law: Value is no longer decisive
The Federal Fiscal Court (BFH) has made it clear in several rulings that the increase in value or a possible market advantage from the measure no longer plays a significant role:
- BFH ruling of 22.10.2009, BStBl. 2010 II p. 280
- BFH ruling of 24.02.2011, BStBl. 2011 II p. 1012
The decisive factor is now: medical necessity.
Cologne Tax Court: Lift recognised as extraordinary expense despite high costs
The Cologne Tax Court recognised the costs of 65.000 Euro for the installation of a lift as an extraordinary expense. Reason:
- A cheaper stairlift was technically not possible
- The lift was medically necessary
Cologne Tax Court ruling of 27.08.2014, Az. 14 K 2517/12
Tax deductible with medical indication
Medically indicated measures can be claimed as extraordinary expenses – even without a public health officer's report or prior certification.
Important:
- A medical justification (e.g. a doctor's certificate) is sufficient
- It does not have to be the "cheapest" or "simplest" solution
- A medically appropriate measure is sufficient
According to the BFH, the lift is considered a medical aid in the strict sense, serving exclusively disabled or ill individuals to alleviate their suffering:
BFH ruling of 06.02.2014, VI R 61/12
No distribution over several years possible
A common pitfall:
The high costs can only be deducted in the year of payment. If the tax impact in that year is low – e.g. due to low income – the tax benefit may partially or completely dissipate.
The tax authorities do not allow distribution of the costs over several years (R 33.4 paras. 4 and 5 EStR).
This regulation has been confirmed by the BFH:
BFH ruling of 12.07.2017, VI R 36/15
Tax advice: How to make the most of the measure
- Obtain written confirmation of the medical necessity of the lift.
- Check if you can bundle other deductible costs to make the tax deduction more effective.
- Consider postponing the payment to a year with higher income to achieve the full effect.
Costs for installing a lift
Can high renovation costs be spread over five years?
Disabled individuals often face very high expenses that healthy individuals do not have. This is particularly true for adapting the living environment for disability needs, such as barrier-free modifications in the home, installation of a stair lift, addition of a lift, construction of a wheelchair ramp, vehicle conversion, etc.
As these are unavoidable expenses, they can be deducted as general extraordinary expenses under section 33 of the Income Tax Act, subject to a reasonable burden. Due to the tax cash principle, the expenses must be fully declared in the year of payment in the tax return.
However, the full deduction in the year of expenditure may be ineffective if the extraordinary expenses exceed the total income from which they are to be deducted. In this case, the tax deductibility does not provide the desired relief effect. For this situation, the Federal Fiscal Court suggested a leniency regulation (section 163 of the Fiscal Code): Affected individuals should have the option to spread the high expenses over several years (BFH ruling of 22.10.2009, VI R 7/09).
However, the tax authorities are resistant and still state in the 2015 income tax guidelines:
"A distribution over several years is not permitted" (R 33.4 paras. 4 and 5 EStR). Unfortunately, the Federal Fiscal Court confirmed the strict stance of the tax authorities and ruled that extraordinary expenses are generally deductible in the year they are incurred. High costs for disability-friendly home modifications cannot be spread over several years for reasons of leniency if they have only a very limited tax effect in the calendar year in which they were incurred (BFH ruling of 12.7.2017, VI R 36/15).
Can high renovation costs be spread over five years?
