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Tax Break Helps Pay for CCRC Fees
- May 29th, 2013
Continuing Care Retirement Communities (CCRCs) -- which offer the entire continuum of care under one roof -- are an appealing retirement housing option, but they can be very expensive. The good news is there is a little-known tax break that can help defray the costs.
CCRCs offer a range of services from independent housing to assisted living to round-the-clock nursing services. When moving into a CCRC, residents enter into a contract that usually includes a hefty entrance fee that may or may not be refundable. The residents pay a monthly fee as well. Entry fees can run from $20,000 to more than $500,000, with monthly charges ranging from $200 to $3,500 or more.
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Felinton Elder Law & Estate Planning Centers
Mindy Felinton concentrates in the areas of Medicaid planning, Veterans' Benefits, asset protection, nursing home planning, elder law, wills, estate planning, trusts, living wills, powers of attorney, probate administration and trust administration and began her legal career 30 years ago as an Assistant State Attorney...
Law Offices of John L. Laster
John Laster is a lawyer licensed to practice in Virginia, Maryland and the District of Columbia. He limits his practice to wealth transfer planning, trusts, wills, powers of attorney, health care decision-making issues, estate administration and related tax, elder law and disability concerns. Listed in The Best Lawyers...
Needham Mitnick & Pollack, PLC
Susan Pollack served as Chairperson of the Falls Church Senior Citizens Commission from 1997 to 2011 and was on the Executive Board of the Falls Church Education Foundation. She has also served on the Board of Directors of the Alzheimer’s Association of the National Capital Area and is a member of the Arlington B...
If your medical expenses are more than 7.5 percent of your adjusted gross income (beginning in 2013 the figure is 10 percent for those under age 65), you may be able to deduct some health care costs from your taxes. Because CCRC's provide a full range of health care services, when residents enter a long-term contract with one of these facilities, they are contracting for future health care. If the CCRC's entrance fee is non-refundable, the IRS considers a portion of that fee to be prepayment of medical expenses. If the entrance fee is refundable, the tax deduction only applies to the portion of the fee that is non-refundable. In addition, a portion of the monthly fee may also be deductible. Click here for an article that explains how the tax deduction might work.
The exact percentage of CCRC fees that are tax deductible varies considerably from CCRC to CCRC. The amount doesn't depend on the health care services that an individual resident actually received -- it is the aggregate for the entire community. The CCRC is responsible for informing residents the percentage of its fees that are for medical costs.
If you want to know if a CCRC is right for you or to find out if you are eligible to deduct medical expenses from your taxes, contact your elder law attorney.
For more information on CCRCs, click here.
Last Modified: 05/29/2013