Question

June Goetz is a successful fashion consultant. She lives in a nice home in Lakeside, Ohio. Her husband, Gabe, is a high-level executive with a major bank. As a result of a torn rotator cuff, June has ongoing arthritis in her left arm. Her physician has advised her that daily swimming can do much to both relieve the pain, and, also, to help repair the arm; it will be a major factor in her treatment. So, she and Gabe decided to put their home on the market and sold it for $300,000. They bought it 8 years ago for $250,000.00 and have lived in it since. They then purchased a new home for $400,000, which has a built-in indoor swimming pool. If she and Gabe had instead constructed a pool at their old residence, instead of selling their old house, it would have cost them $75,000 to build the pool, and their realtor tells them that would have increased the value of their old home by $50,000.

Questions:

(1) is there any chance that a part of the money they spent to buy the new home could be deductible as a medical expense; and
(2) will they have any taxable gain from the sale of their old home?

Answer 1

Answers:

(1) No, the money spent to buy new home could not be deductible as a medical expenses, as the amount spent is not actually spent for medical expenses. The amount which will be deductible as medical expenses should be the actual amount that has been spent for medical treatment as per the available bills. But in the present case, amount has not been actually spent for medical expenses, it has been spent for improvement in her arm. The amount which they have spent for medical treatment and medicines could be deductible as medical expenses and not the amount which has been spent to buy new home.

(2)There will not be any taxable gain from the sale of their old home as they have invested the amount of the sales consideration for buying a new home and the amount they have invested is more than the amount of sales consideration they have received from the sale of their old home.