Tax Deductions

Hot Tubs and Spas

Tax Deductions

What if you could buy your hot tub and get the IRS to subsidize it? Well, it’s possible if your doctor recommends frequent soaks at home! An article in Pool & Spa News (March 31, 1999 issue) shows how to do it. First, you will need a prescription from your doctor in order to get the deduction. Once you have acquired this, you will need to meet certain requirements:

  • The hot tub must be installed expressly to help a debilitating condition (for example, arthritis) for you or for a dependent.
  • The hot tub must be designed and primarily used for medical purposes, not for general recreational use (although others are not prohibited from using it).
  • To calculate how much you can deduct, take this into account:
    • The complete installation cost. This does not include any aspects of the project that are trivial and/or not medically necessary, such as decorative tiling.
    • The impact of the hot tub on the value of your home. If the appraised value of the home goes up due to the installation, you will have to deduct the increase in value from your deduction
    • Whether the hot tub qualifies as a capital-improvement medical deduction. If it does, you will potentially be able to write off the maintenance costs of the hot tub as well.

However, there are limitations:

  • The IRS requires that the deduction exceed 7.5% of your adjusted gross income.
  • If you deduct the hot tub from your taxes when it is installed, you will not be able to deduct it as a home improvement when you eventually sell the house.