34.10 Tax Effects of Moving to a Continuing Care Facility
Senior citizens who move into “continuing care” or “life-care” facilities pay large upfront entrance fees upon admittance, as well as monthly fees thereafter in return for a residence, meals, and lifetime health care, including long-term skilled nursing care, should that become necessary. The payments raise several tax issues discussed in this and the following section (34.11).
Portion of monthly fees deductible as medical expense.
Part of the monthly fees to a life-care community are allocable to health care, which you may deduct as an itemized medical expense subject to the 7.5% floor (17.1). Continuing care facilities generally send a statement to the residents specifying the portion of their monthly service fees that went towards health care.
The IRS and Tax Court have approved ...