Deductible expenses for moving to a continuing care life community

Forum|Forum|3 years ago
February 11, 2023
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I moved to a senior community with a non refundable, no equity upfront buy in fee and pay a monthly fee for my apartment. can I deduct any of the buy in fee or monthly fees?

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Best answer by MAK70

No, the no equity upfront buy in fee is just a contractual fee due at the start of the term with no specified purpose so it is not deductible. The monthly fees for ordinary living expenses are not deductible, but if a part of the fees is specifically designated for nursing services, you may be able to deduct as Medical Expenses if you itemize.

MAK70Answer

BioProfSF

I think the answer is misleading. MOST continuing care retirement communities have a substantial part (15%-50%) of their upfront buyin fees and their monthly service fees qualifying for a deduction as a prepaid medical expense. Each such community can tell you the percentage for its own situation as the inputs for their calculations vary from place to place. This is a simplistic answer to a complex issue as not only does the IRS code speak to it but so do private letrer rulings that maybe precedents and court cases as well. I have yet to locate any person or accounting firm that are experts. The main question for TurboTax is where to itemize any deduction for which you are entited. As an insurance premium or as a medical facility fee? T

DaveF1006

This IRS publication may give you the answers you need. Some continuing care retirement communities are very attractive and offer many amenities but be careful in trying to claim medical expenses for things like food or the rent component to stay in one of these facilities. IRS only limits deductible medical costs for the medical care incurred while staying in the facility. Here is where it makes its distinctions.

If you, your spouse, or your dependent is in a nursing home primarily for medical care, then the entire nursing home cost (including meals and lodging) is deductible as a medical expense.
If that individual is in a home primarily for non-medical reasons, then only the cost of the actual medical care is deductible as a medical expense, not the cost of the meals and lodging.

So the crux of your argument depends on the type of facility you are referring to. Nursing home or retirement community, that is the question?

@BioProfSF

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