Dixie & Assisted Living


Valuation of an Independent Living or Assisted Living facility is as complicated for Dixie Phair as it is for the rest of us.

Income (and offsetting expense) from ancillary and personal services like craft classes, meals, and more, are not appropriate for inclusion in an income based analysis. To illustrate, the following is a list of accounts (simplified) from an Independent Living facility presented in an actual appeal:

Revenue Ok to Include?
First Person Rent $00 yes
Second Person Rent $00 yes
Garage Rent $00 yes
Additional Meals $00 no
Guest Meals $00 no
Beauty/Barber $00 no

For real property analysis, revenue should reflect only apartment and garage rent. In this case, communal meals are folded into the rent, and must be removed (noted in expenses as Food Service Basic) for real property valuation purposes.

Expenses Ok to Include?
Food Service Basic $00 no
Food Service Additional $00 no
Nursing & Food Wages $00 no
Nursing & Food Benefits $00 no
Employment Taxes $00 no
Management for Realty $00 yes
Management for Business $00 no
Liability Insurance $00 no
Building Insurance $00 yes
Maintenance/Repair $00 yes

Expenses should include only those attributed to operating the real estate, such as Building Insurance, Maintenance & Repair plus related supplies for the building (not for any equipment) and realty-related management fee, exclusive of management of the business.

Even better, Dixie requested and examined the detailed accounting schedules, and looked for a rental amount attributed to the real estate. This is illustrated in an earlier post: Dixie & the Nursing Home Appeal.