After the decorations are put away and the New Year celebrations are over, the next thing top-of-mind for many people is the dreaded chore of doing taxes.
Let’s face it - tax season is not as fun as holiday season. But even in such an arduous and time-consuming task, it’s possible to find a silver lining.
A bright spot this year is that even though the tax code has recently undergone numerous changes, Congress left intact the tax deductions pertaining to residents of life plan communities. Of course, anything that mentions taxes must be prefaced with a caveat or two… or three or four. This article should not be interpreted as tax advice, and before making a decision, it would be a good idea to seek the counsel of your tax advisor. It’s also worth mentioning that the IRS has not yet issued definitive guidance on calculating tax deductions pertaining to life plan communities.
However, we have been working with a team of consultants to arrive at a conservative methodology for calculating deductions to provide our residents – and those who are considering living here – with some real numbers. For the year ending Dec. 31, 2017, we determined that approximately 32.5 percent of monthly fees – just over $1,000 per month for each person – could potentially be deductible as a medical expense for Plantation Village residents.
For the initial lump-sum entrance fee paid by life plan community residents, the IRS seems to be holding the position that a portion could be deductible as an expense for medical services to be rendered at a later date. But the deductible portion would only pertain to the entrance fee amount associated with a standard one-bedroom unit, since the IRS views anything beyond that as only applicable to housing, not medical expenses.
An entrance fee for a standard one-bedroom unit could vary between approximately $97,000 for a traditional plan, to more than $186,000 for a 90-percent return of capital plan. Considering that approximately 32.5 percent of monthly fees could also be an allowable deduction, it’s easy to see why people get excited about the chance to take such a significant amount off their taxes.
Imagining a tax return equal to either one of the amounts listed above is enough to give anyone champagne wishes and caviar dreams! Adding in all the benefits Plantation Village provides for its residents only makes the idea of living here that much more attractive.
Plantation Village residents have peace of mind in knowing they will receive priority access to The Davis Community – a premier facility specializing in long-term care - at a discounted rate. The hardship clause is certain to give peace of mind, as well, since residents will always have a home in our community, even if their assets become depleted.
Add peace of mind. Multiply by world-class amenities. Subtract the worries and drudgery of maintaining a home. What’s the result? A lush and vibrant community set on 56 acres, complete with walking trails, a fitness and wellness center, library, woodworking shop, five-star-quality restaurant, and an arts and crafts center.
Our residents can rest easy knowing there is a 24-hour onsite care center, as well as an emergency call system in every home, so they can always get the care they need. Basically, every necessity is taken care of, so our residents never have to do anything they don’t want to do… unless it’s calling their tax advisor.
For a complete list of amenities – or an in-depth look at the methodologies used to arrive at our IRS tax calculations - call me at (910) 772-3188 or visit www.PlantationVillageRC.com.
Lisa Polanski is the director of marketing at Plantation Village. Plantation Village is a non-profit continuing care retirement community that offers independent living on a 56-acre campus in Porters Neck, just minutes from downtown Wilmington and area beaches. Residents enjoy first-class services in a wide variety of home styles, from one- and two-bedroom apartments to cottage homes and two-bedroom villas. Plantation Village is managed by Life Care Services™, the nation’s third-largest elder care management company.