Potential Tax Benefits of a Life Plan Community
No matter where you are in your search for senior living options, you’re always looking for ways to maximize your finances and save money where you can. After all, aging can get pretty expensive, especially when it comes to health care costs.
While aging in place – staying in your primary residence as you get older – may be an attractive option at first, there are actually many financial benefits you can reap by moving into a Life Plan Community. There are many potential tax benefits that could be equal to or greater than your current tax benefits that come from living in a private home.
We’ve put together some information about the tax benefits of a Life Plan Community like Canterbury Woods Gates Circle. Please note, however, that this is a general overview only. To determine whether you would be able to claim certain expenses based on your personal situation, you’ll need to consult with your personal tax advisor who can provide detailed information pertaining specifically to you.
Is Senior Living Tax Deductible?
If you’ve searched “is senior living tax deductible,” you’ve probably gotten a lot of confusing information. That’s because senior living is a broad term that encompasses everything from 55+ communities all the way to memory care. A better and more specific question might be, “Is senior independent living tax deductible?”
The short answer: no, not in the traditional sense. Independent living services are not tax deductible – unless you’re in independent living at a Life Plan Community. That’s due to the Life Care contract that residents enter into when they join a senior living community like Canterbury Woods.
What Is a Life Care Contract?
Life Care is a contract that certain senior living communities offer. Generally, a Life Care contract is offered by a Continuing Care Retirement Community (CCRC), also known as a Life Plan Community.
This type of contract requires an entrance fee to enter into the community, plus regular monthly fees throughout the duration of the resident’s life at the community. There are different types of entrance fee contracts – Canterbury Woods, for example, provides Type A and Type B contract options. While different contracts ensure different benefits to seniors, the overall benefit is the peace of mind they bring for your future plan of care. A Type A Life Care contract ensures predictable rates for future levels of care and support, no matter how an individual’s care needs may change in the future.
What Expenses Are Tax Deductible in a Life Plan Community?
One of the biggest tax deductions you could possibly reap is when you first move into Canterbury Woods. A percentage of your entrance fee and your future monthly fees can be considered a “prepaid medical expense.” According to the Internal Revenue Service, qualifying medical expenses that add up to more than 7.5% of your adjusted gross income can be itemized and deducted from your taxes.
As you can see, this can be a significant reduction in your tax liability, especially if you’re paying an entrance fee. This is why independent living at a Life Plan Community can potentially have tax benefits – something you might not get at a different type of senior living.
Those aren’t the only potential tax benefits. Additional costs for medical care like doctor bills, prescriptions, therapies, health insurance premiums, and others are also eligible to help reduce your tax liability.
We hope this information is beneficial to you, no matter what stage of life you are in. Careful planning will help you and your family members have peace of mind now and in the future, both personally and financially.
Contemporary Retirement Living and Peace of Mind Near Elmwood Village
At Canterbury Woods Gates Circle, our goal is simple: provide seniors with the best possible living experience. To meet our residents’ changing needs, we offer Life Care. This contract grants access to a full continuum of care, which includes assisted living, memory care, skilled nursing, and rehabilitation.
To qualify for Life Care, residents need to move in while still independent in addition to meeting certain age and income requirements.
Contact us to learn more about independent living at Gates Circle today.