Can you deduct the cost of your swimming pool on your tax return? Just Maybe.

In general, you cannot directly deduct the cost of installing or maintaining a swimming pool on your tax return as a personal expense. However, there are some situations where the costs associated with a pool could be deductible, particularly if the pool is related to medical expenses or certain home business deductions.

Here’s a breakdown:

Medical Expense Deduction

If your doctor prescribes a swimming pool for medical reasons (such as to treat a health condition like arthritis or to assist with rehabilitation), the costs related to the pool may be partially deductible as medical expenses. This includes:

• The cost of installing the pool (if medically necessary).
• Maintenance costs (e.g., cleaning, heating, chemicals).
• Repairs associated with making the pool usable for the prescribed treatment.

However, this deduction is only available to the extent that your total medical expenses exceed 7.5% of your adjusted gross income (AGI) for the year (as of the 2023 tax year). Additionally, the IRS only allows you to deduct the portion of the expense that is directly related to medical treatment—not the entire cost of the pool, if it’s used for recreational purposes as well.

Home Office or Business Use

If you use the pool as part of a home business (for example, if you run a swim school or a spa business), then the costs associated with the pool might be deductible. In this case, you could deduct:

• A portion of the installation cost if the pool is part of your business property.
• Ongoing maintenance costs (like cleaning, utilities, and repairs) proportionate to how much the pool is used for business purposes.

If the pool is used exclusively for business, you may be able to deduct a larger share of the expenses. If it’s used partially for personal and business purposes, you would need to allocate the costs appropriately (i.e., deduct only the business-related portion).

Home Improvement/Capital Gains

If you install a swimming pool as part of a home improvement that increases the value of your property, the cost of the pool can be added to the basis of your home. This increases your home’s value for tax purposes, which can help reduce the amount of capital gains taxes you pay when you sell your home.

• For example, if you buy your home for $300,000 and install a $40,000 pool, your basis would increase to $340,000. If you later sell the home for $400,000, you would only pay capital gains tax on the $60,000 of profit (instead of $100,000 if the pool wasn't added).
• Keep in mind that this doesn’t directly deduct the cost of the pool from your taxes, but it can reduce your taxable gain when you sell your home.

Energy-Efficient Pools

If your pool is energy-efficient (e.g., solar-powered heating system), there may be some tax incentives available under the Residential Energy Efficient Property Credit (such as for solar pool heaters). However, the pool itself may not be eligible for a direct credit unless it specifically meets the criteria for energy efficiency.

As tax laws can be complex and vary by situation, it’s always a good idea to consult with a tax professional or CPA to get personalized advice based on your specific circumstances.