Calculating Rent for Residents of Long-Term Care Facilities

January 25, 2018

Beginning with tax year 2017, taxpayers claiming the Elderly Homeowner/Renter Credit, who pay rent to a non-exempt long-term care facility (LTCF) can use a new calculation to determine the amount of rent to report for the calculation of the credit. A non-exempt LTCF means a facility that is not exempt for property tax purposes.

Generally, to determine rent paid to an LTCF, a taxpayer can use the detailed bill provided by the facility if it clearly identifies the rent amount. If the taxpayer does not receive a detailed bill from the facility, the they may estimate the amount of the rent by deducting the following amounts from the gross amount paid:

  • 20% of the gross amount if the resident receives board services provided by personnel such as meals, housekeeping, transportation, entertainment;
  • 30% of the gross amount if the resident receives medical or paramedical care such as nursing care or memory care.

The net amount, after one or both deductions, represents the rent that the claimant can report on line 7 of the Form 2EC. For example, a claimant who paid $10,000 in 2017 to a non-exempt LTCF, and who received meal and housekeeping services, and nursing care, can report $5,000 of rent ($10,000 – $2,000 – $3,000 = $5,000).

This alternative calculation replaces the per diem rate that taxpayers used in past tax years when they did not receive a detailed bill. The new calculation is not applicable to past years.