How are the costs for building modifications due to a disability taken into account?

Renovations in your own home that are necessary due to a disability can be tax-deductible as exceptional expenses under § 33 EStG. It should be noted that the expenses are only deductible under certain conditions, and a reasonable personal contribution is applied by the tax office.

Basic information on tax deductibility:

• Medical necessity: The renovation costs must be due to the disability and considered medically necessary. Such measures are classified as medical expenses as they serve to alleviate suffering or maintain health.
• Compulsion due to disability: According to the case law of the Federal Fiscal Court (BFH), the expenses are so strongly justified by the disability that any potential value or increase in value of the house does not play a role in the deductibility (BFH rulings of 24.2.2011 and 22.10.2009).

Examples of recognised renovation costs:

• Shower renovation: The disability-friendly renovation of a shower, such as the installation of a floor-level shower element, is recognised as an exceptional expense because it is directly related to the disability. No value is credited, even if other family members can also use the renovation (FG Baden-Württemberg, ruling of 19.3.2014, 1 K 3301/12).
• Installation of a lift: The costs for installing a lift are recognised if the technical installation of a cheaper stairlift is not possible. The BFH considers such measures as a medical aid used exclusively by disabled persons (BFH ruling of 6.2.2014, VI R 61/12). Even high costs, such as 65.000 Euro for a lift, are considered reasonable if no cheaper alternatives exist (FG Köln, ruling of 27.8.2014, 14 K 2517/12).

• Additional rent for disability-friendly renovation: The Munich Fiscal Court has ruled that an increase in rent due to disability-related renovations is also deductible as an exceptional expense if the landlord carried out the renovation and passed on the costs through the rent (FG Munich, ruling of 27.10.2022, 10 K 3292/18). The Federal Fiscal Court still needs to clarify how the deductible rent increase is to be calculated (Ref. VI R 15/23).

Non-recognised renovation costs:

• Wheelchair-accessible path in the garden: The construction of a wheelchair-accessible path in the garden is not recognised if alternative access exists, such as via another terrace. In this case, only the craftsmen's services are deductible (BFH ruling of 26.10.2022, VI R 25/20).

Restrictions on tax deductibility:

• No distribution of costs over several years: High costs for disability-friendly renovations must be deducted in the year they are incurred. Distribution of costs over several years is not permitted, even if it would be advantageous for tax purposes (BFH ruling of 12.7.2017, VI R 36/15).

Tip:

If the exceptional expenses exceed the total income, the tax benefit may be lost. It is advisable to seek tax advice before undertaking major renovations to optimise the tax burden.