seniors exploring their tax savings from entrance fee senior living

February is here, bringing with it the season of love — and what better way to show yourself some love than by getting your financial house in order? As tax season approaches, it’s the perfect time to organize your paperwork, uncover those potential tax benefits and maybe even fall head over heels for a lower tax statement.

Many seniors and their families are surprised to learn about the tax breaks that come with living in a retirement community. If you’ve chosen — or are considering — an entrance fee senior living community like Beatitudes Campus, some opportunities could positively impact your tax situation.

Are Entrance Fees for Retirement Communities Tax Deductible?

One of the most notable benefits of entrance fee communities is the potential tax deduction. When moving into a community like Beatitudes Campus, a portion of the fee may qualify as a medical expense deduction.

Why? Because some of the entrance fee is often allocated toward future healthcare services, making it a prepaid medical expense. This falls under the IRS guideline allowing deductions for medical expenses that exceed 7.5% of your adjusted gross income (AGI), the key figure used to determine your eligibility for tax credits and deductions. (To calculate your AGI, begin with your total gross income from all taxable sources, including wages, interest and retirement income. Then, subtract eligible adjustments such as alimony payments, deductible IRA contributions and self-employment taxes.)

Is Independent Living Tax Deductible?

Even if you’re living independently at Beatitudes Campus, you may still benefit. A portion of your monthly service fees may also qualify as a prepaid medical expense. This means you could claim deductions even while enjoying the vibrant, independent lifestyle our community offers.

Are Assisted Living and Memory Care Expenses Tax Deductible?

For those residing in assisted living or memory care, the answer is often yes. The cost of assisted living and memory care can be tax-deductible if a doctor certifies that you need these services due to a chronic condition or cognitive impairment. These expenses, which may include help with daily activities like bathing, dressing or medication management, can also be considered medical expenses.

Questions to Ask Your Financial Advisor or Tax Professional

Navigating tax deductions can feel complex, but your financial advisor or tax professional can provide clarity. Here are five questions to ask:

  1. What portion of my entrance fee is tax-deductible as a medical expense?
  2. How do I determine which part of my monthly fees qualifies as a medical deduction?
  3. Are moving expenses tax-deductible for retirees?
  4. What documentation do I need to substantiate these deductions?
  5. How does my living situation affect my eligibility for deductions? For example, is memory care tax deductible? Is the cost of assisted living tax deductible?

Why Consider an Entrance Fee Community Like Beatitudes Campus?

An entrance fee senior living community provides peace of mind with a plan for future care and offers potential financial advantages. These benefits can add up significantly over time, from the CCRC tax deduction for entrance fees to ongoing deductions for monthly costs.

Choosing Beatitudes Campus means you’ll enjoy a supportive, active lifestyle while knowing you’re making a financially informed decision. With options for independent living, assisted living and memory support, Beatitudes Campus caters to a variety of needs, ensuring you or your loved one can age with dignity and confidence.

Discover Your Happily Ever After

At Beatitudes Campus, we’re here to help you fall in love with the potential financial advantages of moving into an entrance fee senior living community. While we can’t offer tax advice, we’re happy to play matchmaker by connecting you with resources and providing all the details about how our community supports a fulfilling, stress-free lifestyle you’ll adore.

If you have additional questions related to tax or other financial benefits, our residency counselors are here to assist you in finding the answers you need. Start the conversation today!

Featured Image: Inside Creative House / Shutterstock