Understanding the Tax Benefits of an Entrance-Fee Senior Living Community

After years of homeownership, Austinites Jim and Susan started to feel the weight of maintaining their 4-bedroom residence — endless repairs, rising costs and the unpredictability of future health care needs. They loved their active lifestyle and didn’t want to worry about “what-ifs.”

When they discovered Longhorn Village, they were excited about the hassle-free living, built-in care options, and welcoming community of friends and neighbors. But what really surprised them? The potential tax benefits of living in a Life Care Community. The all-in-one senior living option offered them independent living with the promise of future care if ever needed.

Like many older adults, Jim and Susan hadn’t considered how a portion of their entrance fee and monthly costs could qualify as tax-deductible medical expenses. Their decision became even clearer with financial security and an enriching lifestyle in one place.

Next-Level Financial Security With Life Care

When considering a move to a senior living community, many people focus on the lifestyle benefits — maintenance-free living, social connections and community life. But, choosing a Life Plan Community, also known as a Continuing Care Retirement Community (CCRC), like Longhorn Village which also offers Life Care helps manage the cost of future long-term care with built-in financial security.

A Life Plan Community offers a full continuum of care — independent living, memory care, assisted living and skilled nursing — all on the same campus. Some communities, like Longhorn Village, take Life Plan one step further by offering Life Care. Life Care contracts provide the most extensive and comprehensive senior living plans available; they offer assurance of priority access to on-site health care and predictable rates for life.

While tax laws vary based on individual circumstances, understanding these potential benefits can help you make an informed financial decision. Let’s explore how an entrance-fee Life Care contract can be a smart move, for your well-being and your wallet.

Are Entrance Fees for Retirement Communities Tax Deductible?

A significant advantage of moving to a Life Care Community is the possibility of deducting a portion of the entrance fee as a prepaid medical expense for future care.

The exact percentage of your entrance fee that may be deductible depends on the community and how it allocates funds toward health care services. Some communities, like Longhorn Village, provide residents with an annual statement detailing the portion of fees that may be tax-deductible.

It also depends on which entrance fee you select, as some communities offer fees with different levels of refundability. Only the nonrefundable portion of the entrance fee can be considered eligible for tax deductions.

What About Monthly Fees?

In addition to entrance fees, some monthly service fees may also qualify for deductions at Life Care Communities. Since some of these fees go toward future health care services, residents in independent living may find a percentage of their monthly payments is deductible as a medical expense.

If you or a loved one resides in independent living or needs to transition to assisted living, you might be wondering:

• Is independent living tax deductible? Typically, only the portion related to health care services may qualify.
• Is assisted living rent tax deductible? If the resident requires medical care as part of their living arrangement, a portion of the monthly fees may be deductible.
• What percentage of assisted living is tax deductible? It varies, but a tax deduction may apply if a substantial part of the fee covers medical care.

Financial Security Meets Exceptional Living

Beyond tax benefits, an entrance-fee Life Plan Community with Life Care offers financial predictability and peace of mind. Life Care helps manage the cost of future long-term care. From assisted living and memory care to rehabilitation and skilled nursing, you’ll receive the support you need with the financial security to cover it.

Residents enjoy stable monthly costs without the uncertainties of rising health care expenses. The Continuing Care Retirement Community tax deduction is an added financial perk that can make the decision to move even more appealing.

At Longhorn Village, residents secure their future health care needs and embrace an active, vibrant lifestyle in a welcoming community. From engaging activities and chef-prepared meals to top-tier amenities and personalized care, it’s a place where financial foresight meets exceptional living.

5 Questions To Ask Your Tax Professional

Before making a move, it’s always best to consult with a financial advisor or tax professional. Here are five questions to bring to your meeting:

1. Are CCRC fees tax deductible, and what portion applies to my situation?
2. How much of my entrance fee can I deduct as a medical expense?
3. Can I deduct a portion of my monthly service fees?
4. What type of assisted living tax deduction can I expect for my loved one?
5. Are there other senior living tax benefits I should be aware of?

Plan for the Future With Confidence

Choosing a Life Care Community like Longhorn Village isn’t just about securing a comfortable and enriching lifestyle — it’s also a smart financial move that may provide tax advantages. If you’re exploring retirement living options, now is the ideal time to learn more about the potential CCRC tax deduction and how it can benefit you or your loved one.

Ready to take the next step? Contact Longhorn Village today to explore the lifestyle, care options and financial benefits of joining our community.

*Jim and Susan are a fictional couple but accurately represent many older adults who have chosen to make Longhorn Village their home.