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Possible Tax Deductions for Assisted Living

tax deduction for assisted living

When it comes to senior care, assisted living is a popular option for those who need some help with daily activities but don’t require the round-the-clock medical attention of a nursing home. While assisted living can be a costly option, there are some potential tax deductions that can help offset the expense. In this article, we’ll explore the possible tax deductions for assisted living and what you need to know to take advantage of them.

Understanding Assisted Living

Before we dive into the tax deductions, let’s first define what assisted living is. Assisted living is residential for seniors who need help with daily activities such as bathing, dressing, and medication management, but do not require the 24-hour medical care provided in a nursing home. Assisted living facilities offer a range of services and amenities, including meals, housekeeping, transportation, and social activities.

Tax Deductions for Medical Expenses

One potential tax deduction for assisted living is medical expenses. If the resident is considered chronically ill, some of the costs associated with assisted living may be tax deductible as medical expenses. According to the IRS, a person is considered chronically ill if they are unable to perform at least two activities (such as bathing, dressing, or eating) without substantial assistance for at least 90 days, or if they require substantial supervision due to cognitive impairment.

MD Senior Living

What Medical Expenses are Deductible?

Deductible medical expenses may include:

  • The cost of medical care provided by a physician, nurse, or other medical professionals
  • The cost of prescription medications
  • The cost of medical equipment, such as a wheelchair or hearing aids
  • The cost of transportation to and from medical appointments
  • The cost of certain long-term care services, such as assistance with activities of daily living

What Medical Expenses are NOT Deductible?

Non-deductible medical expenses may include:

  • The cost of non-prescription medications
  • The cost of cosmetic procedures
  • The cost of most non-medical services provided by assisted living facilities, such as meals and housekeeping
  • Home Sale Exclusion

Another potential tax benefit for seniors who move into assisted living is the home sale exclusion. If the seniors sell their homes to move into an assisted living facility, they may be able to exclude up to $250,000 ($500,000 for married couples filing jointly) of the capital gain from the sale of their homes. This exclusion can be used once every two years.

Long-Term Care Insurance

Long-term care insurance is designed to cover the costs associated with long-term care, including assisted living. Premiums for long-term care insurance may also be tax deductible, subject to certain limitations.


Assisted living can be a costly option for seniors and their families, but there are some potential tax deductions that can help offset the expense. By understanding the tax benefits of assisted living, you can make an informed decision about whether it’s the right option for you or your loved one.

At MD Senior Living, we are committed to providing high-quality care and services to our residents. If you have any questions about our facility or the services we provide, please don’t hesitate to contact us at 480-470-5986.


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