Retirement Community Fees Expected to Skyrocket Due to IRS Dispute

The Internal Revenue Service wants to crack down on the billions of dollars in entrance fees held by retirement communities. In one case, Classic Residence by Hyatt, a for-profit community, might have to pay taxes on those entrance fees. In another, Mission Ridge, a not-for-profit community, might have to pay tax penalties based on interest profits made on these fees.

Steve Maag, director of assisted living and continuous care for the American Association of Homes and Services for the Aging, told HousingWatch that the two cases were almost opposites, but the net result of both cases would be additional costs for running these facilities and ultimately make the cost of operating these retirement communities more expensive.

So who will pay?