THIS ARTICLE IS BEING UPDATED AND WILL BE COMPLETED SOON
It is possible that the cost of a hot tub or spa may be tax-deductible from gross income under certain situations such as to reverse obesity or to treat an injury. The word spa in this article is commonly called a hot tub but there is a difference.
If a spa or hot tub is deductible, two of the issues to look at when trying to deduct the cost is:
- Whether it will be used exclusively for the treatment of injuries or partially for treatment of injuries and partially for enjoyment; and
- How long it will be needed to treat the injuries. There may also be other issues.
If a spot or hot tub is used partially for the treatment of injuries and partially for enjoyment, the question becomes whether the “primary purpose” is for the cure, mitigation, or treatment of the injury. If it cannot be shown that the primary purpose of the hot tub relates to an injury, it will not be deductible.
Another question to consider is how long it takes to resolve the injury. For instance, if someone is injured in an accident and has a debilitating or disabling injury such as a back injury and a medical doctor such as an orthopedic surgeon or physiatrist (Physical Medicine & Rehabilitation) prescribes use of a spa or hot tub but the injury resolves three months later, there will no longer be a primary purpose of the hot tub to treat the injury after that. In this situation, I would think that the cost to rent a hot tub for three months should be tax-deductible. Alternatively, if a hot tub was purchased, three months of use over its depreciated lifespan might be deductible.
The IRS stated in its opinion letter Number: INFO 2003-0202 Index No.: 213.05-00.
“Section 213(a) allows as a [tax] deduction the expenses paid during the taxable year for medical care of the taxpayer, spouse, or dependent. Under § 213(d)(1)(A), an expense is for ‘medical care’ if its primary purpose is the diagnosis, cure, mitigation, treatment, or prevention of disease.
Notice the words “primary purpose”. Because a hot tub or spa is of a particularly personal nature, you must establish that your hot tub is “primarily” for the cure, mitigation, treatment, or prevention of disease before you can deduct the cost of your hot tub on your tax return.
You may be able to claim your hot tub as a tax deduction even though you also derive pleasure from it and even though someone else such as your spouse may use the spa, as long as you are buying the hot tub or spa primarily to relieve pain due to an injury or disease.
You can’t include membership dues in a gym, health club, or spa as medical expenses, but you can include separate fees charged there for weight loss activities
IRS Publication 502 https://www.irs.gov/pub/irs-pdf/p502.pdf
- 1 How do you prove to the IRS that your hot tub/spa was purchased primarily to relieve pain?
- 2 The IRS may look at other objective factors that indicate your motive for purchasing the hot tub
- 3 Can you deduct the cost of a hot tub when you have been reimbursed by an insurance company for the cost?
- 4 Can you claim your hot tub as a tax deduction when you suffered a short-term injury?
- 5 How much will a tax deduction for a hot tub save me?
- 6 How to Get Your Insurance to Pay for Your Hot Tub
How do you prove to the IRS that your hot tub/spa was purchased primarily to relieve pain?
Of course, you do not have to prove anything unless you are audited, however, you should prepare in case you are. This is accomplished by medical records which prove that you have an injury and/or arthritis and a prescription from your doctor prescribing a hot tub for the purpose of alleviating or treating your injury or arthritis. Ideally, you should request a written report from your treating physician which summarizes your condition (diagnoses); attaches copies of medical records showing objective findings such as X-Ray, MRI and EMG reports; states that the physician believes a hot tub would be of therapeutic value; why the hot tub is of benefit to you and your prognosis with or without using a hot tub (what the physician hopes the hot tub will accomplish).
The IRS may look at other objective factors that indicate your motive for purchasing the hot tub
For instance, a very large hot tub built into a very expensive beautiful deck may indicate an ulterior motive, therefore, with such a hot tub, it would be advisable to have substantial medical documentation and deduct an amount less than the total purchase price. Since the difference in price between a large hot tub and a small hot tub is usually small, you should be able to deduct most of the cost of your hot tub. For instance, if a small four-person hot tub costs $3,500 and you purchase a large spa for $5,500, I would deduct only $3,500.
Can you deduct the cost of a hot tub when you have been reimbursed by an insurance company for the cost?
No. You should note that if you obtain payment from an insurance company to purchase your hot tub, you cannot also deduct the cost of the hot tub on your tax return. If you deduct the cost of your hot tub on your tax return and in the next year obtain reimbursement from an insurance company, you would then have to declare that reimbursement as income on your next year’s tax return.
Can you claim your hot tub as a tax deduction when you suffered a short-term injury?
Discuss this with your tax professional. My common sense tells me that if you suffer a back injury that gets better a year later and you no longer need treatment, you should be able to deduct the depreciation of your spa for the year you received treatment for your injury.
I believe the IRS would disallow a tax deduction where the taxpayer sustained a short term injury such as a sprain unless the taxpayer also happens to be a professional athlete or can document that use of the hot tub was necessary to reduce the loss of income.
Where an injury becomes a long-term problem, such as when traumatic arthritis develops, I believe a claim to deduct a hot tub should be allowed but will the IRS agree? The long-term nature of some injuries and medical problems become more obvious and easier to prove, such as when a taxpayer undergoes surgery. You should discuss this issue with your accountant and your doctor to make sure that both are in agreement as to the length of time required for a disability and as to whether your medical condition meets that requirement.
How much will a tax deduction for a hot tub save me?
Deducting a spa will save me approximately 40% of the purchase price, however, the value of your deduction will depend upon your tax bracket. Discuss this with your accountant. In fact, you should discuss everything mentioned here with your accountant prior to deducting the expense of your hot tub on your tax return.
How to Get Your Insurance to Pay for Your Hot Tub
Will the Insurance Company Pay the Entire Cost of My Hot Tub?
If you are entitled, the insurance company will have to pay the amount required to purchase a hot tub necessary for your treatment. You should check your insurance policy to see if it excludes the cost of purchasing a spa/hot tub. This does not mean that the insurance company must purchase the largest hot tub you can find. After all, a hot tub that can accommodate nine people is not necessary to treat the injuries of one person. Since the difference in price between a large hot tub and a small hot tub may be small, you may be able to obtain reimbursement for most of the cost of your hot tub, if not the entire amount.
If a hot tub is prescribed by your physician to reduce back pain, hip, knee, joint, arthritis pain or to promote better circulation, a hot tub may be covered by your medical insurance policy. Check with your medical insurance plan for eligibility requirements. To properly support a health insurance claim to pay for a hot tub, you should consider obtaining the following:
1) A prescription from your doctor prescribing a hot tub.
2) Copies of medical records showing objective findings of an injury, such as X-Ray reports, MRI reports and “needle” EMG (by a neurologist) reports.
3) A report from your treating physician which summarizes your condition; states that the physician believes a hot tub would be of therapeutic value; why the hot tub is of benefit to you; and the prognosis or what the physician hopes the hot tub will accomplish.
Medical Coverage From Third-Party Liability Insurance
If you were injured in an accident for which you have a lawyer representing you for personal injuries, ask your lawyer to find out if the defendant’s insurance policy has medical coverage. If the answer is yes, you may be able to obtain payment for a hot tub from the defendant’s insurance policy. If there is no medical coverage, the cost of a hot tub can be added to the list of your damages and you may be able to obtain a higher settlement at the end of your case.
To properly support a third-party liability insurance claim to pay for a hot tub, in addition to 1-3 above, I would get 4) a written report from your doctor stating “in my professional opinion, the patient’s injury is causally related to the accident of (date of accident)”. “Causally related” are the magic words.
If you were injured in a car accident in a No-Fault insurance state, you may be able to obtain insurance coverage to pay for your hot tub if prescribed by your doctor. A no-fault insurance company may deny the bill, however, if properly supported the bill should be approved. To properly support a no-fault insurance claim to pay for a spa/hot tub, in addition to 1-3 above, I would get 4) a written report from your doctor stating “in my professional opinion, the patient’s injury is causally related to the accident of (date of accident)”. “Causally related” are the magic words.
Whether or not you are covered by no-fault insurance, your car insurance policy may have an additional medical coverage provision also called “med pay” which will provide you with money which you can use to purchase a hot tub or spa.
Disclaimer: If you can take a tax deduction for your spa, that’s great but do not purchase a spa only if you can take a tax deduction because the IRS may disallow your deduction. Discuss everything mentioned here with your accountant prior to deducting the expense of your hot tub on your tax return. The information here is NOT tax advice and although I am a lawyer and took 17 credits of tax in law school, that was a long time ago. I am an accident lawyer, not a CPA or an accountant and you should not rely on the information here.