Choosing a Life Plan Community, also known as a Continuing Care Retirement Community (CCRC), offers numerous financial advantages, representing a predictable financial future and a tremendous lifelong value.
Here, we’ll explore the potential tax deductions associated with entrance fees and monthly fees, which add to the overall value of living in a CCRC.
Understanding the Entrance Fee
An entrance fee is a one-time payment made when you move into a CCRC. This fee will vary depending on the community, the community’s contract, and the amount and quality of services offered. Suppose you’re considering The Glen at Scripps Ranch, a CCRC with a Type A contract. In this case, your entrance fee will secure a beautiful residence at the community, a robust lifestyle with resort-like amenities and nearly countless activities. Most importantly, you’ll have priority access to the adjacent health center for assisted living, memory care and long-term care in a skilled nursing center, if ever needed.
Here are two things to consider about the entrance fee at The Glen:
- The care cited above is considered a full continuum of care, a safety net that many other retirement living options don’t have.
- While an upfront entrance fee may seem like an added expense, understand that if you ever need care, The Glen’s contract ensures you’ll receive it with practically no increase to your monthly fees – a lifelong safeguard against the ever-rising costs of long-term care on the open market.
Tax Deductions on Entrance Fees
So, is senior living tax deductible? You bet it is!
According to IRS guidelines, a portion of the entrance fee can be deductible as a pre-paid medical expense on your federal tax return. This is particularly relevant for CCRCs that offer comprehensive health care services, as a significant portion of the entrance fee may be allocated towards future medical care.
For example, if 40% of your entrance fee is designated for medical expenses, you can potentially deduct that portion from your taxes.*
*Always review a community’s contract carefully and consult with a tax professional to ensure you’re following IRS guidelines.
Monthly Fee Deductions
In addition to the entrance fee, monthly fees paid to a CCRC can also be partially deductible. These monthly fees typically cover a variety of services, including housing, dining, as well as priority access to health care. Like the entrance fee, a portion of these monthly fees can be tax deductible as a pre-paid medical expense. This can reduce your taxable income, providing ongoing savings throughout your residency.
Long-Term Financial Planning
Choosing a CCRC with tax benefits in mind is a strategic decision for long-term financial planning. The potential tax deductions on the entrance fee and monthly fees can help offset the cost of living in a CCRC, making it a more affordable option in the long run. Additionally, the stability and predictability of monthly fees in a CCRC remove the burden of monthly budgeting and long-term financial planning, providing peace of mind for residents and their heirs.
Additional Considerations
While the tax benefits of choosing a CCRC like The Glen at Scripps Ranch are significant, it’s important to consider other factors, like quality of life. The Glen at Scripps Ranch is known for its exceptional lifestyle, amenities and beautiful setting, making it an attractive choice for those seeking a secure and enriching retirement living experience.
Get all the facts during a community visit.
To gain a full understanding of the financial benefits and tremendous value of choosing a CCRC like The Glen, contact us today and schedule a tour. You’ll learn the built-in protections of our Type A contract and get a peek at the wonderful lifestyle residents enjoy every day.
