If the installation hasn't raised the value of your property, the total cost of the generator can be counted as a medical expense. A whole-house generator can be deducted as a medical expense in the itemized deductions in Schedule A. If used to power essential medical equipment, backup generators may be eligible for a tax reduction. Certain home improvements for people with disabilities may be considered deductible medical expenses.
Portable generators that are used to power oxygen tanks or keep insulin cold are often eligible because they are a medical necessity during power outages. While the federal government doesn't offer tax deductions or credits for backup generator installations, some state programs can. Talk to an accountant, tax preparer, or generator installer near you to determine what state programs or incentives are available in your area. Because many backup generators run on clean-burning natural gas or propane, they may be eligible for state energy tax incentives.
A portable generator to power household medical equipment during a power outage would likely be considered a medical expense. Only part of the cost will be deductible and you must include a statement from your doctor in your tax return detailing the medical condition. If the value of your home increases, it's a home improvement and it adds to the cost base of your home and may reduce your capital gains when you sell it, but it's not a medical expense deduction. Although you may not be eligible to receive an energy tax credit directly, homeowners are guaranteed a capital tax credit for installing a whole-house generator if they make a profit from the sale of their home.
In my city where I live in Florida, there are many older retirees who use portable generators for things like insulin and oxygen pumps, as well as to keep the fridge running and keeping the insulin cold. IRS examples of medical improvements that generally don't increase home values are things like grab bars and walk-in showers. Some of those taxes may be offset by installing a backup generator before selling it and deducting the cost of the generator as a capital improvement on your tax return. A generator is not solar-powered and does not meet the requirements to qualify for*any* tax relief of *any* type on *any* statement, state or federal.
For example, if you install a whole-house generator immediately after a flood, hurricane, earthquake, or volcanic eruption, you'll almost certainly get a tax credit for the purchase and installation. You can deduct the difference between the cost and the increase in the value of your home as a medical expense.
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