Swimming Pool Taxes Explained - 2023 Updates

Tax season is coming up, so you may be wondering if you can deduct a swimming pool from your tax return. Qualifying taxpayers can deduct 100% of the installation costs the year the pool is installed, as well as deduct maintenance, operating, and cleaning costs for the years to come, but the catch is that the pool must be used solely for medical purposes.

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Key Takeaways:

  • Pool taxes include any taxes that are related to the installation, operation, cleaning, and maintenance of a swimming pool.
  • Pool taxes, including installation costs and maintenance costs, can only be deducted from your taxes if the pool is used solely for the purpose of providing therapy or treatment for a qualifying medical condition. If the pool is used for fun or recreational purposes at all, the pool cannot be utilized as a tax benefit.
  • If a pool installation is approved as a medical home improvement expense, then all operation, cleaning, and maintenance expenses can be deducted from your taxes.
  • Even if your pool does not qualify as a medical home improvement expense, installing a pool increases the value of a property and is considered a home improvement for taxes.

What Are Pool Taxes?

Pool taxes are the taxes related to installing, operating, cleaning, and maintaining a swimming pool.

Important Detail About Deducting Pool Taxes

The only way for a pool to be entirely deductible as a home improvement expense when you file your tax return is for the pool to be used entirely for medical purposes. This means that the installation costs for swimming pools cannot be deducted as a medical home improvement expense if anyone uses the pool recreationally. 

Medical home improvement expenses work differently from writing off business expenses from your taxes, such as a home office or personal vehicle. Business expense deductions allow taxpayers to claim the percentage of the space used for business purposes when they file their taxes, whereas claiming a swimming pool as a medical home improvement expense will only be deductible if the swimming pool is solely used for medical purposes.

Medical Conditions That May Qualify for A Swimming Pool Tax Deduction

There are several instances that may warrant a doctor’s recommendation for a pool installation. Common instances where a pool installation may be recommended include when someone suffers from chronic pain, musculoskeletal diseases, osteoporosis, or multiple sclerosis, and if someone needs physical therapy. Swimming pools are also frequently recommended for people who want to exercise but are unable to place full weight on their legs. While these examples can result in major tax savings when you install a pool, it is important to note that the IRS usually will not consider the need to lose weight a valid reason for a person to install a pool, and therefore, tax deductions would not be approved in this case.

The reason that installing a pool can be listed in your tax deductions if recommended by your doctor is that public access to pools is not always available to people. Most cities have public swimming pools that people could use for therapeutic reasons. Other people may live in neighborhoods that offer access to a shared pool. However, during times such as the COVID-19 pandemic when many public areas, including pools, were closed for a period of time, it may benefit the taxpayer to install their own pool so they can regularly practice their aquatic therapeutic treatment. 

Are Pool Maintenance Taxes Deductible?

Pool maintenance costs can be deducted from your tax return only if the pool is solely used for medical purposes. If you have a medical condition that qualifies for a medical home improvement expense, any operation and maintenance costs related to keeping your pool running can also be deducted as a tax benefit. An example of this type of cost may include the chlorine that keeps a pool clean. Heating costs are another example of tax-deductible expenses in your pool.

Are Recreational Pools Tax Deductible?

No, swimming pools that are used for recreational use at any time can not be deducted from your tax return. Pools are only tax deductible if they are used for medical purposes 100% of the time. If you or your guests want to utilize a pool to practice your diving, swim in the clean, blue water, or maximize relaxation by lying out in the sun, this is considered recreational and therefore, the pool is not tax-deductible. 

If your physician or physical therapist recommends that installing a swimming pool on your property would be beneficial to your health situation, this may be a case in which a swimming pool could be fully deducted from your taxes.

If your provider recommends you install a pool, they must provide written documentation that the pool is recommended for medical purposes for the installation to be considered as a tax break. This documentation will serve as proof that the swimming pool is required for the medical home improvement exemption.

Is A Pool Considered A Home Improvement For Taxes?

Even if you are not eligible for a medically-necessary pool installation, you may be wondering if installing a pool would be considered a home improvement for taxes.

The good news is that yes, installing a pool will increase the value of your home and, therefore, will be considered a home improvement. Home improvements like a pool are considered capital improvements that increase your property value.

If you install a pool and then decide to sell your house in the future, your capital improvements, including a new pool, will be added to the tax basis of the property. This tax basis will be subtracted from the sum the house sells to determine the profit. It is the profit that the taxpayer will owe taxes on.

Will Deducting Pool Taxes From Your Tax Return Increase Your Risk Of Being Audited?

If you deduct pool taxes from your tax return, you may be increasing your chances of being audited by the IRS.

The IRS conducts tax audits on randomized and flagged accounts to ensure the validity of all taxes being reported on your tax return.

Because pool taxes can lead to such significant savings for qualifying individuals, this tax deduction can trigger the IRS to pay closer attention to your account. 

Improving Chances of Success When Audited

The beneficial thing about knowing you may be audited is you can prepare to back all of your claims with the appropriate documentation. In the case that you are claiming a swimming pool as a medically-necessary home addition, tailoring your pool to treat your specific condition can be helpful in persuading the IRS to approve your deductions.

For example, certain medical conditions require specific equipment, such as a wheelchair-accessible ramp or extra wide steps, for pool therapy to take place. These features will likely be an additional cost to install that won’t necessarily increase the value of the house.

If there are aspects of the pool that are only beneficial in the context of therapy it is more likely that the IRS will see the pool as a medical necessity as compared to a pool that was installed for recreational purposes.

There are many tax benefits that can be taken advantage of when you file your taxes every year, which can significantly lower your tax bill. Depending on your financial situations, you may qualify for tax credits and deductions that eliminate your tax liability or even earn you a tax refund.

If you need help understanding your tax rate, exploring tax benefits, or filing your tax return, consult with a professional at Ideal Tax to optimize your return this tax year.