My wife and I are planning to enter a retirement community that charges a $150,000 entry fee and $1,700 in monthly fees. Is it true that we might be able to deduct over $50,000 in medical expenses on our tax return for the year we move in?
Yes, it’s true, and you’ll likely also have monthly-fee-related medical deductions of $5,000-10,000 per year thereafter. Most continuing care retirement communities (CCRCs) offer guarantees of life care in exchange for a sizeable entry fee. This guarantee is a type of long-term care medical insurance deductible in the year paid. Based on my experience and research, 20% to 40% of the entry fee and monthly fees is medical expense. The exact percentage depends on your contract type and the cost data of the CCRC.
Please contact me if you or your loved ones have questions about this. For greater details, please see my law review article.