Everything You Need to Know About Pool Taxes

Building a pool in your backyard means instant fun. However, a pool will likely increase the value of your property. Or more specifically, an inground pool will increase the value of your property, while an above ground pool may not impact your tax bill. That said, you may be eligible for certain exceptions, say,  if you have a medical condition that requires a pool, you may qualify for a deduction.

Find out what impacts your pool taxes and ways to save when it comes to your tax bill. 

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What Are Pool Taxes?

There isn’t necessarily a category called “pool tax” that you pay the IRS. Instead, the term refers to the increase in your annual property taxes because of the pool you’ve installed. 

Generally, an inground swimming pool is considered a capital improvement and will raise the assessed value of your home. An above-ground pool is less likely to raise your property taxes since it’s not permanently installed and is removable. 

Who Pays for Pool Taxes?

The homeowner typically pays the taxes on their pool. If you live in a planned community or in a condo, the pool is considered part of the common area. You pay for the pool through your homeowner association (HOA) dues or condo fees. 

How Are Pool Taxes Calculated?

Here’s the math on what factors play a part in how  pool tax is calculated: 

Size of the Pool 

Generally the larger the pool, the more taxes you’ll pay. Pools with a larger square footage require more materials and adjustments to the land. If you want to stay within budget, think about installing a smaller inground pool or even considering an above-ground pool. This option may make more sense if you see yourself moving in a few years. 

Features and Age of the Pool 

Pools can come with their own features. If you add a built-in waterfall, lights or special custom tiles, this can increase the pool’s value, which translates to higher taxes. A hot tub or spa can also increase the value of your pool. Features generally add value, and when your property is assessed for taxes, some of the increases may be because of the features you’ve added to your pool. 

In contrast, as the pool ages, its value depreciates. A 15-year-old pool is going to have less of a tax impact than a pool built more recently. 

Local Regulations 

Pool taxation can vary based on where you live. If you haven’t installed a pool, it may be worth checking out the local taxation rules. You may want to find out how much of your home’s value is taxable under local rules. Don’t be afraid to ask questions; after all, you’re the one who’s responsible for paying the taxes. 

Fair Market Value 

Once you add an inground pool, the fair market value of your property increases. The appraiser of your property will look at comparable homes that do or don’t have a pool. If your area shows that pools are in high demand, this will drive up your property value.

Who Qualifies for Medical Pool Tax Deductions?

It’s rare to qualify for a medical pool tax deduction. But that doesn’t mean that the deduction is impossible. Here are some examples of medical conditions that may qualify for a tax deduction on your pool: 

• Arthritis or osteoarthritis. Swimming in the pool is a low-impact movement that may help the condition. 

• Chronic pain or fibromyalgia. Water can sometimes be a way to relieve pain. 

• Multiple sclerosis or muscular dystrophy. A pool can help with mobility. 

• Post-surgical recovery. Some surgeries may require rehab in a pool. 

• Respiratory conditions. These conditions may require exercise in a pool.

What You Need to Qualify for a Medical Pool Deduction 

• Doctor’s order. You generally need a doctor’s order stating that you have a medical condition that requires a pool as a treatment to help or relieve your condition. This will typically need to be a written order.

• Primary use. You must prove that the primary use of the pool is for treatment. 

• No other alternative. You may have to demonstrate that there’s no other alternative. You have to prove that you don’t have reasonable access to another pool. 

How Do Medical Prescription Swimming Pool Tax Deductions Work?

To claim a medical swimming pool deduction, you must itemize your tax return. Once you itemize, you report your medical deduction on Schedule A (Form 1040). Keep in mind that only the portion of total medical expenses that exceeds 7.5% of your Adjusted Gross Income (AGI) is deductible.

Here’s an example that breaks it down: If a pool costs $30,000 to install and increases your home’s value by $10,000, you can use a $20,000 tax deduction. Keeping track of operating expenses and saving receipts can help you take a larger tax deduction.

Can You Write off Pool Maintenance on Taxes?

You may be able to deduct 100% of your pool’s maintenance and upkeep if it’s strictly used for medical purposes. The expenses that may be deducted include repairs, chemicals, professional services and utilities. To deduct pool maintenance, you must itemize your deductions. Keep in mind you can deduct only the portion of your total medical expenses that exceeds 7.5% of your adjusted gross income (AGI). It’s best to talk to a qualified tax professional to understand exactly what you’ll need to deduct pool taxes and to learn if you qualify. 

Ways to Lower Your Pool Tax Bill or Obtain Deductions

How can you make the pool work to your advantage while filing your tax return? Here are a few strategies: 

1. Choose an above-ground or smaller pool. An above-ground pool is seen as tangible personal property instead of real property. Therefore, an above-ground pool isn’t factored into the total assessed property value. A smaller inground takes up less square footage, so the fair market value will be assessed accordingly. 

2. Use your retirement contributions to your advantage. By maxing out your retirement contributions to your retirement accounts, you can lower your taxable income. If you’re claiming a medical deduction for your pool, this makes it easier to exceed the 7.5% AGI hurdle. 

3. Be aware of other credits. If you power your pool and home with solar panels, you may be eligible for a tax credit under the Residential Clean Energy credit. Also, some regions may offer utility rebates. 

4. Consider business deductions. If your pool is used for your business,a swim school or a physical therapy treatment for patients, you can deduct a portion of the maintenance and depreciation. You’ll have to be able to prove that your pool is used for business purposes. 

Final Takeaway

Keep in mind these takeaways when thinking about pool taxes:

• An inground pool will add to the value of the property; as a result, your property tax may increase. 

• Consider an above-ground pool or a smaller pool to lower your tax burden. 

• You can claim a pool tax deduction if you have a specific medical condition and have written authorization from a doctor. 

• Explore ways you can lower your pool tax bill. Look at energy credits, medical and business deductions. 

FAQs

Can you write off a pool on your taxes?

A personal pool is generally not tax-deductible. However, some costs may be deducted if the pool is deemed as medically necessary. 

How much will an inground pool raise taxes?

Your home’s assessed value will increase with an inground pool. The amount depends on the local property tax rate, the home’s assessed value and whether local authorities reassess the value after the improvement. 

Does adding a pool increase property taxes?

Usually, an inground pool will increase the home’s value. As a result, property taxes will increase. 

Is a pool considered a home improvement for taxes?

An inground pool is considered a capital improvement. 

Does an above-ground pool increase property taxes?

It’s less likely that an above-ground pool will increase property taxes. If it’s not permanently installed, it’s less likely to affect the home’s value. 

Is pool maintenance tax deductible?

Pool maintenance for a personal pool is usually not tax-deductible.