6 June 1995 Internal T.I. 9502287 - HOME RENOVATIONS AS MEDICAL EXPENSES

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Whether the reasonable costs of constructing an addition to the house to accommodate the needs of a wheelchair bound spouse are deductible as a medical expense under paragraph 118.2(2)(l.2) of the Act.

Position TAKEN:

Yes.

Reasons FOR POSITION TAKEN:

Under the circumstances of this case, the expense was laid out to allow the patient to be functional within the dwelling.

		June 8, 1995

	XXXXXXXXXX Tax Services	HEADQUARTERS
	Attention: XXXXXXXXXX	J.A. Szeszycki
	           Audit Services			(613) 957-8953

		950228

Home Renovations and Additions As Medical Expenses

This is in reply to your memorandum of January 20, 1995 in which you requested our views on the acceptability, as a medical expense under the provisions of subsection 118.2(2) of the Income Tax Act (the Act), of costs incurred by a taxpayer in building an addition to his home to accommodate the special needs resulting from confinement to a wheelchair. We apologize for the delay in providing you with a response.

Our understanding of the circumstances, as represented in the taxpayer's letter of November 15, 1994, are that the taxpayer's wife became paralysed in 1992 resulting from a condition known as osteo mylitis. The taxpayer himself is suffering from the ongoing effects of multiple sclerosis that have occasionally confined him to a wheelchair as well. As a consequence of his wife's special needs, it became clear to the taxpayer that in order to continue to reside in their home modifications would have to be made to accommodate those needs.

In addition to the expected renovations that permit persons in wheelchairs to be functional within their homes, such as the widening of doorways or the installation of ramps, it was concluded that the space within the rooms of the house was inadequate to accommodate the special equipment needs of the patient. The taxpayer opted to build an addition to his house that would add 800 square feet (20 ft. X 40 ft.) of space to the house, providing his wife with a larger bedroom and kitchen.

You have made reference to an opinion that was issued by this Directorate in 1991 with respect to a case that has many similarities to the case at hand. In that opinion we had stated our view that the word "modifications", as found in subparagraph 118.2(2)(l.2) of the Act prior to its amendment in 1994, did not include additions to a home, nor was it intended to include such additions. As you noted, we had indicated within that opinion that had the words in the provision been "alterations" or "renovations" we would have to recognize a strong argument in favour of accepting the claim of a house addition as a medical expense where all the other basic criteria of section 118.2 of the Act are met. The 1994 amendment to the medical expense credit provision did in fact incorporate the phrase "alterations and renovations" in place of "modifications", an amendment which has effect with respect to expenses incurred after 1990.

For your information, the case which was the subject of the 1991 opinion was eventually appealed and, with the support of a legal opinion on the interpretation of the use of the word "modification" in this context, the claim in respect of the cost of the addition to the house was (re)considered to be acceptable as a medical expense. In this case, therefore, to the extent that the addition to the house was considered necessary in order for the patient to be mobile and functional within the dwelling, reasonable costs incurred to construct the addition would be eligible for the medical expense tax credit.

P.D. Fuoco
Section Chief
Personal and General Section
Business and General Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch