(2023)
What conditions must be met for care home costs to be deducted?
Expenses for accommodation in a nursing home, care home for the elderly, or in the care section of a retirement home or residential facility can be deducted as extraordinary burdens according to § 33 EStG if the reason is care needs, a disability, or an illness.
Persons in need of care are "those who, due to a physical, mental, or emotional illness or disability, require assistance with the ordinary and regularly recurring activities of daily life on a permanent basis, expected to last at least six months, to a significant or higher degree" (§ 14 SGB XI).
Persons are considered in need of care if they:
- have been classified into one of the three care levels (until 2016) or one of the five care grades (from 2017) according to the Care Insurance Act §§ 14, 15 SGB XI.
- have been found to have a significant impairment of everyday competence, so-called dementia patients (§ 45a SGB XI).
- hold a severely disabled pass with the mark "H" or "Bl".
- receive outpatient care and the care costs are invoiced separately by a recognised care service.
- are accommodated in a retirement home and care services of care rate level 0 are invoiced separately (BFH judgment of 10.5.2007, BStBl. 2007 II p. 764).
Expenses for accommodation due to care needs, disability, or illness can be deducted as extraordinary burdens like medical expenses according to § 33 EStG. This applies not only to the costs of medical services and care but also to the costs of accommodation and meals. The tax office reduces the costs by a reasonable burden.
If care home costs are deducted as extraordinary burdens, the increased disability allowance of 7.400 Euro and the 'normal' disability allowance cannot be claimed (R 33.3 para. 4 EStR). Furthermore, care home costs are reduced by a so-called household saving due to saved meal and accommodation costs if the household is dissolved.
The situation is different for age-related accommodation in a retirement home: In this case, care home costs are considered normal living expenses and are not recognised for tax purposes. If care needs arise at a later date and at least care level I is determined, the care home and care costs can be fully deducted as extraordinary burdens, with the tax office applying a reasonable burden (BMF letter of 20.1.2003, BStBl. 2003 I p. 89).
