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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29941
Experience:  Taxes, Immigration, Labor Relations
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We plan to move to a Continuing Care Retirement Community

Customer Question

We plan to move to a Continuing Care Retirement Community (CCRC). The "Entrance Fee", which is comparable to the price of a normal home, enables us to live in the Dwelling Unit of our choice, but gives us no propriety interest or equity in the Dwelling Unit. Upon death of both of us, 90% of the original entrance fee is to be refunded to our estate.
The Entrance Fee is to be financed by a short-term loan secured by the equity in our current principal residence. The loan would be paid off by the proceeds from the sale of our current principal residence. We own no second/vacation homes.
Would the interest on the loan be deductible on our Federal tax return?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Based on your information - that interest is a personal interest and is not deductible on your tax return.
That is not a home mortgage interest - as there is no collateral property - so no deduction here.
Sorry if you expected differently.

Based on your information - current law would not allow to deduct these interest expenses on the federal tax return.

Expert:  Lev replied 1 year ago.

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If you still have any doubts, need clarification - please be sure to ask.
I am here to help you will all tax related issues.

Expert:  Lev replied 1 year ago.