A bathroom remodel is usually not tax deductible if done for personal use in a primary residence. The IRS treats most home renovation projects as personal expenses.
But there are exceptions. A remodel might qualify for deductions, tax credits, or depreciation. This is true if it is for medical purposes, business use, rental property improvements, or energy-efficient upgrades.
This guide explains each scenario in plain english.
The General Rule — Bathroom Remodels Are Not Deductible
The IRS classifies personal home improvements as nondeductible. If you remodel your bathroom for comfort or style, you cannot deduct the cost. That applies to almost every homeowner. Exceptions exist, and those are covered below.
When a Bathroom Remodel May Be Tax Deductible
Some bathroom remodels serve more than comfort. In these cases, the IRS allows limited deductions or tax breaks.
Medical Necessity Renovations
- Remodels made for a medical purpose may qualify as medical expenses.
- ADA-compliant improvements include grab bars, walk-in tubs, adding handrails, widened doors, and exit ramps.
- A doctor must prescribe the modification.
- The deduction applies only if unreimbursed medical expenses exceed 7.5% of your Adjusted Gross Income (AGI).
- Only the cost beyond any increase in home value is deductible.
Business Use (Home Office or Daycare)
- If you operate a home office or daycare, a bathroom remodel may qualify.
- The remodel must serve the business area of the home.
- The deductible portion is based on square footage used for business.
- Claimed on Schedule C or Schedule E.
Rental Property Bathroom Remodels
- Bathroom remodels in a rental property are considered capital improvements.
- They are not deducted all at once. Instead, they are depreciated over 27.5 years.
- Report these expenses on Schedule E with rental income.
- Remodels help reduce the amount of taxable rental income over time.
Energy-Efficient Upgrades
- Bathroom remodels do not qualify for direct deductions, but energy efficient upgrades may qualify for a tax credit.
- Examples include solar water heaters, low-flow toilets, water-saving fixtures, energy-efficient windows, fuel cells, and solar panels.
- The tax credit is often worth 30% of the cost of qualified energy improvements.
- Taxpayers claim these credits on IRS Form 5695.
How a Remodel Affects Taxes When Selling Your Home
Bathroom remodels can affect your taxes when you sell.
- Remodels increase your home’s cost basis.
- A higher cost basis reduces the amount of capital gains tax you pay.
- Even if not deductible, the remodel adds long-term value to your home.
Documentation and IRS Compliance
The IRS requires proof.
- Keep receipts, invoices, and contracts.
- Store before-and-after photos.
- Obtain a doctor’s note if claiming medical necessity.
- Work with a tax professional to file correctly.
Quick Comparison Table
| Scenario | Tax Treatment | IRS Form |
|---|---|---|
| Personal remodel | Not deductible | N/A |
| Medical necessity remodel | Deductible as medical expense (over AGI threshold) | Schedule A |
| Business use remodel | Deductible portion for business use | Schedule C/E |
| Rental property remodel | Deductible through depreciation | Schedule E |
| Energy-efficient upgrades | Eligible for tax credits (30% of cost for qualified energy) | Form 5695 |
| Home resale (capital basis) | Increases cost basis, reduces capital gains | Form 8949 |
FAQs About Bathroom Remodel Tax Deductions
Can I deduct a bathroom remodel on my primary residence?
No. Unless it serves a medical purpose prescribed by a doctor.
Does adding a new bathroom increase my tax benefits?
Not directly. It increases cost basis, which reduces capital gains tax at resale.
What counts as medical necessity for a bathroom remodel?
Doctor-prescribed ADA features such as grab bars, walk-in tubs, widened doors, or exit ramps.
Do energy-efficient bathroom upgrades qualify for tax breaks?
Yes. They qualify for tax credits, not deductions. Use IRS Form 5695.
Are bathroom remodels in rental properties deductible?
Yes. They are depreciated as capital improvements on Schedule E.
Final Takeaway
Bathroom remodels are not tax deductible for most homeowners. Exceptions exist if the remodel serves a medical purpose, supports a home office, improves a rental property, or includes energy efficient upgrades. Always document your expenses and consult a tax professional.
If you live in Houston, TX or the surrounding areas, TriFection provides expert bathroom remodeling services. They handle improvements to your home with precision and care, while you focus on understanding the tax side of the project.