Costs for shower renovation
Current the Baden-Württemberg tax court recognised the costs for the shower conversion in full as extraordinary expenses according to § 33 EStG, although a reasonable burden must be deducted. The costs for materials and labour are medical expenses as they directly alleviate a medical condition (Baden-Württemberg tax court, 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 her shower converted to be disability-friendly in her own home: 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 floor-level and wheelchair accessible.
The tax court did not deduct a value for the new shower. According to 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 in view of the overall circumstances takes a back seat" (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).
(2022): Costs for shower renovation
Costs for installing a lift
Expenditure for the installation of a lift in one's own home has not previously been recognised as an extraordinary burden. The same applies to a lift tower added to an existing building. The reasoning was that such construction work is also beneficial for non-disabled people and therefore increases the value of the building.
However, according to recent BFH case law, the question of value and market advantage no longer plays a significant role (BFH ruling of 22.10.2009, BStBl. 2010 II p. 280; BFH ruling of 24.2.2011, BStBl. 2011 II p. 1012).
Recently, the Cologne Finance Court recognised the costs for the installation of a lift amounting to 65.000 Euro as extraordinary expenses because the installation of a cheaper stair lift was not technically possible (FG Cologne of 27.8.2014, 14 K 2517/12).
Expenditure for medically indicated measures is to be considered as extraordinary expenses without the need for an individual examination of the necessity of the reason and the amount. Furthermore, it should be noted that not only the medically necessary minimum provision is required, but any diagnostic or therapeutic procedure that is sufficiently justified.
This medical assessment must be followed in the tax evaluation, unless there is an obvious disproportion between the required and the actual expenditure. Even with costs of 65.000 Euro for a lift, there is no obvious disproportion between the required and the actual expenditure. These costs are reasonable. This is particularly the case if the installation of a cheaper stair lift was not technically possible.
The Federal Fiscal Court had already clarified that the lift is a "medical aid in the strict sense" that is purchased exclusively by sick or disabled people to alleviate their suffering. For such items, no medical certificate needs to be obtained before purchase, as the strict requirements of § 64 para. 1 no. 2e EStDV do not apply (BFH ruling of 6.2.2014, VI R 61/12).
Lohnsteuer kompakt: However, the full deduction in the year of expenditure may be ineffective if the extraordinary expenses are higher than the total income from which they are to be deducted. In this case, the tax deductibility does not provide the desired relief effect. But the tax authorities explain: "A distribution over several years is not permitted" (R 33.4 paras. 4 and 5 EStR).
The Federal Fiscal Court has confirmed the strict stance of the tax authorities: Extraordinary expenses can generally be deducted in the year in which they were incurred. High costs for disability-friendly home modifications may not be spread over several years for reasons of equity 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).
(2022): 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 adapting a home for disability needs 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).
(2022): Can high renovation costs be spread over five years?
