How to Take Advantage of the CCRC Tax Deduction
Seniors have many benefits when it comes to living in a retirement community and tax deduction is one of the lesser known ones. Senior living costs can be offset with a tax deduction allowing you to transition into a new community more smoothly.
Read on to learn more about CCRC tax deductions and benefits, and get started today!
A Guide to the Tax Deduction
According to the IRS, It is common for individuals to make errors when preparing their tax returns. Therefore, it is important to avoid some of the most common mistakes related to the standard deduction for seniors. Let’s dive into the details of a CCRC tax deduction so you know what to do.
What is the CCRC Tax Deduction?
Two potential tax savings can be gained by moving into a CCRC. Your entrance fee can be deducted once, and your monthly fees can be deducted annually. Even if you live independently at the CCRC and require little to no care, you can deduct the costs as prepaid medical expenses. Under the tax law of 2020, a substantial write-off may be allowed for individuals who itemize their taxes if their out-of-pocket medical expenses exceed 10 percent of their adjusted gross income. However, only non-refundable portions of the entry fee can be used for tax deduction purposes. It is advised to talk to a tax professional or elder law attorney for more information about the latest laws and deduction eligibility.
Seniors entering a CCRC typically sign a Life-Care agreement, which provides for housing and health services while they are healthy and active. This agreement provides a way for seniors to plan for their retirement, housing, and health services for the remainder of their life with significant tax benefits. –Rick Rodgers
CCRCs also provide you with a more stable way to manage your long-term healthcare costs. From independent living to full care, you pay for all your lifetime health care services up front when you buy into the community and pay the monthly maintenance fees.
Cost Analysis of Moving into a CCRC
The first thing you might ask when learning about the CCRC tax deduction is what exactly does it entail? CCRC stands for Continuing Care Retirement Community and they offer a full range of services. Communities like Seafields at Kiawah Island provide residents with luxurious amenities to help support the active life of leisure following retirement.
The most common type of contracts are Type A CCRCs, which offer an all-inclusive option and predictable costs. It’s important to understand the type of contract you’ll be involved in as it can alter the monthly cost and coverage. After determining what type of community you’re transitioning into, you need to understand any entrance fees and monthly costs associated with this new lifestyle.
Entrance Fees & More
CCRCs and Life Plan Communities require an entrance fee to reserve your spot. Upfront fees come in two types: refundable and non-refundable. Refundable entrance fees are slightly more expensive, but a portion of what you or a loved one pays will be reimbursed.
In spite of the fact that non-refundable entrance fees are usually lower in price, once the resident or family departs from the community, the entrance fees are not refunded. By paying your entrance fee, you gain lifetime access to your residence, as well as the community’s premier amenities and services. Additionally, you will be required to pay monthly fees, which cover day-to-day expenses such as maintenance, housekeeping, meals, activities, and transportation.
Seafields at Kiawah Island is a modified fee-for-service Life Plan Community that offers a discount on Lifecare benefits.
To learn about entrance fees and more, read our blog.
Although the fees may seem intimidating at first, it’s important to remember what you’re getting for your investment. Retirement in a CCRC provides you with support for home maintenance, living expenses, and healthcare needs — allowing you to live your post-retirement life to the fullest.
Related: Retirement Community Cost Calculator: CCRC Living
Begin your CCRC Journey at Seafields
Knowing all the facts about your taxes is essential. CCRCs and Life Plan Communities offer a variety of benefits, and that’s why it’s important to understand them. Seafields at Kiawah Island offers residents a carefree, opulent lifestyle, along with a sense of fellowship and an array of recreational opportunities. With 90 independent living units and a variety of floor plans to choose from, our community provides a comfortable and spacious living environment.
To start your new life at Seafields, and fully take advantage of the CCRC tax deduction, click the button below. We look forward to hearing from you and helping you begin your new phase of life with ease and confidence!