Taxes/ Caring for Aging Parent?

Question

Hi,
I'm wondering if there are any tax related benefits for me to claim (or any other resources out there) for absorbing the housing expense related to caring for my aging father. In 2002 we took out a 2nd mortgage to build a father-in-law apartment on to our existing home as my father was very ill and had no where to live and our existing home was not large enough to accomadate him. Although we were hoping to be able to write off some of the expense in building this dwelling (it cost us $55,000), we never did find a write off option on taxes. I'm wondering if indeed there was some sort of write off that we could have taken (or could still take)? Secondly, my dad is low income (social security & works pt/self employed as barber) so, we don't charge him anything to live here, however, we absorb the cost of him living here (heat, mortgage). Any ideas to aid us in maximizing resources to help financially (ie: taxes, senior organizations, etc) would be greatly appreciated!! Thanks.

Answer 1

The money you spent on adding the father-in-law apartment is not deductible currently, but it increases your basis in the property (add $55,000 to your cost basis) in determining the gain on the sale of the property when you sell it.

If you are providing at least 50% of the support for your father-in-law, then you can claim him as your dependent. You have to add up his social security payments and his part-time wages. If the amount you provide for him (cost of rent, heat, food, etc.) adds up to more than that, then you are providing at least 50% of his support.

Answer 2

Unfortunately there is no deduction for the addition to your home. You can add the cost to the cost basis of the home which will reduce your gain at sale time. Depending upon the total gain when you do sell and the laws at that time there may or may not be any tax benefit for you there.

You MIGHT be able to claim your father as a dependent. The rule that might bite you there is his part-time self-employment income. If that's more than $3,300 (for 2006, it will increase for 2007) you cannot claim him as a dependent. To throw a little salt in the financial wound there, that's a gross income test; you can't deduct his business expenses to get it below $3,300 even though those would be legitimate business expense deductions if he filed his own return.

To claim him as a dependent you must also have provided more than half of his support. Housing, food, utilities, taxes, medical care, interest on the loan to pay for the modifications to your home, etc. are all fair game in determining that. You have to consider how much he actually paid towards his own upkeep out of his own funds. If he paid no rent or utilities and you provided all his meals, his support contribution would be zero. Contrary to what another poster stated you do not consider any of his income that he didn't use to contribute to his own support. The IRS rule is pretty explicit on that point!

See IRS Pub 501 for all of the rules on claiming him as a dependent.

Answer 3

i'd do it, yet i'd insist my brother were given some professional practise like a CNA license. also i'd have a nurse or someone qualified examine in on them a minimum of weekly and to grant some alleviation for your brother. yet keep checking on them your self as well as have your different sibling make wide-spread visits. Giving your brother of project to do different issues. I took care of my grandmother for the kin. i develop into under no circumstances paid even though it develop right into a time i is totally not apologetic about. And note there perhaps a time even as your brother can't do it any extra. each and every from time to time it would want to be better than one human being can take care of. Be searching on your dad and mom welfare and your brothers.

Answer 4

If you provide more than 50% of his expense - and with the house, utilities and such I believe you do,
you may claim him as an exemption as you file head of household,
You need his social security number to place him as your dependant, and he is a senior citizen.

This is a better way than renting to him and claiming the rent.
The home improvement - is yours. It would be a nightmare if you sold your home and had to reclaim the "rented depreciated portion", and it's not worth it to you for the $55,000.
You are receiving the interest from the $55k mortgage as a deduction from your income taxes on your schedule A.


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