Taxes Associated With CCRCs
◉ This article will discuss taxes that may be associated with CCRCs. Read on to learn more about this complex topic.
The True Value Of Tax Deductions Of CCRC Medical Expenses
CCRCs (Continuing Care Retirement Communities also known as LifePlan communities) often advertise that part of the entrance fee and part of the monthly fee is tax deductible as a medical expense. This is true but check with your tax advisor if the amount is large enough to impact your taxes at all. Taking medical expenses as a deduction on Schedule A is hard to do due to limits and percentage cut off rules. If your income is high or if you do not generally itemize, the deduction may not be big enough to make any impact at all on your taxes. Most monthly fees are probably too small over the course of a year to impact your taxes much, if at all. Your tax advisor or CPA will know best so be sure to check with him or her.
Don't forget about your at death refund of a CCRC entrance fee when considering taxes. See if your state has either inheritance or estate taxes or both. Your heirs, be they your children or other people or charities, may need to take this lump sum of money into account as your final taxes and death taxes are computed.
State Nursing Home Tax
Some states, such as New Hampshire, tax facilities that have a nursing complex. In New Hampshire the tax is humorously called the "Granny tax" and applies to CCRCs if they have a nursing complex. All residents at a New Hampshire CCRC pay this tax whether or not they are using nursing care at the CCRC. Ask your CCRC if there are any particular taxes applied for living there, and if so, check with your tax advisor if there are any deductions you can take at tax time.
CCRCs have entrance fees when you apply and are admitted. These fees can potentially be written off on your taxes as a medical expense. Some states may also have other taxes associated with nursing care. Make sure to check with your financial advisor to get the most benefit out of these taxes.