In the U.S., Continuing Care Retirement Community (CCRC) fees are generally not fully tax-deductible. However, some portions of the fees might be, depending on how they are structured.
Here’s how it typically breaks down:
1. Monthly Maintenance Fees:
These fees usually cover services such as meals, housekeeping, maintenance, and security. These are typically not deductible as medical expenses.
2. Medical or Health-Related Fees:
If part of your CCRC fees goes toward medical care (for example, nursing care or rehabilitation services), that portion may be deductible as a medical expense. The IRS allows you to deduct medical expenses that exceed 7.5% of your adjusted gross income (AGI), but you need to keep detailed records to substantiate the medical portion of the fees.
3. Entrance Fees:
The upfront, lump-sum “entrance fee” or “buy-in” that you pay when you move into a CCRC is typically not deductible. However, if any part of the entrance fee is allocated for healthcare services, that part could potentially be deductible if it meets the criteria for medical expenses.
4. Long-Term Care Insurance Premiums:
If you are paying for long-term care insurance as part of your CCRC arrangement, those premiums may be deductible as a medical expense, depending on your age and the IRS guidelines for that year.
To determine what part of the fees, if any, might be deductible, it’s a good idea to:
- Keep records of your payments and the breakdown of what they cover.
- Consult a tax professional who can guide you based on your specific situation and any changes to tax laws.
Tax laws can vary, so it’s always best to get tailored advice.