Assisted Living Fee Expense

[Kram BergGold]

My client bought a room in an assisted living facility. The Director of the facility wrote everyone a letter sayinbg $1,000 per month is deductrible as medical. This I understand. Also it say $112,000 of the entry fee is a medical expense. Do I deduct this all in 2009 or is it amortized somehow?

[ChEAr$]

My client bought a room in an assisted living facility. The Director of the facility wrote everyone a letter sayinbg $1,000 per month is deductrible as medical. This I understand. Also it say $112,000 of the entry fee is a medical expense. Do I deduct this all in 2009 or is it amortized somehow?

Did I read that right? $112,000 dollars? medical expense?

Something just ain't right.
How on earth could that "director" justify such?

[Gretel]

I believe unless the entry fee is for future medical services it is not deductible. Looks like one can assume this letter is proof that this entry fee is for future medical services. Question remains how this interrelates with the already $1,000 monthly medical expenses.

I would have the client clarify this or call the facility myself and I would do some more digging on the Internet.

[S T]

Entry Fees

Here some articles which maybe of interest

http://www.nysscpa.org/cpajournal/2007/507/essentials/p44.htm

http://www.hansonbridgett.com/docs/articles/ASHA_Key_Tax_Benefits.pdf

I googled the info - and it would seem that part of the entrance fees have a componet of health care costs?



Sandy

[Gene V]

My client bought a room in an assisted living facility. The Director of the facility wrote everyone a letter sayinbg $1,000 per month is deductrible as medical. This I understand. Also it say $112,000 of the entry fee is a medical expense. Do I deduct this all in 2009 or is it amortized somehow?

See if this helps from Pub. 502 page 10

Lifetime Care—Advance Payments

You can include in medical expenses a part of a life-care
fee or “founder’s fee” you pay either monthly or as a lump
sum under an agreement with a retirement home. The part
of the payment you include is the amount properly alloca-
ble to medical care. The agreement must require that you
pay a specific fee as a condition for the home’s promise to
provide lifetime care that includes medical care. You can
use a statement from the retirement home to prove the
amount properly allocable to medical care. The statement
must be based either on the home’s prior experience or on
information from a comparable home.

[taxea]

Is the the amount the apartment cost? I would ask for a legal cite from the nursing home so that I could verify the information before deducting it in full.

[Burke]

Also it says $112,000 of the entry fee is a medical expense. Do I deduct this all in 2009 or is it amortized somehow?

You do not amortize. If it is deductible (see reply from Gene V for cite), it is all in the year in which it is paid. Usually up front, one-time. The amounts seem a little out of line but it may vary from locality to locality. It definitely is not 100% of the entrance fee or the monthly cost. How much did they pay?

[taxea]

http://www.harmoney.com/tax/tips.php?id=319