Senior Living Expansion: Tax Strategies to Support Growth

For senior living and care owners and operators planning an acquisition, development, or expansion into new markets, early tax planning can help identify savings opportunities and unexpected costs.

Growth decisions can change your organization’s workforce incentives, multistate and local tax obligations, and property tax exposure, particularly as you enter new markets or adopt more complex ownership structures.

Explore the requirements and planning opportunities in each area, and how addressing them early may help protect cash flow and support your organization’s growth.

How senior living providers can obtain workforce tax credits

Labor is one of the largest expenses for senior living and care organizations, and staffing is closely tied to resident care. Workforce incentives can therefore support both your mission and plans for sustainable growth.

The Work Opportunity Tax Credit (WOTC) is a federal income tax credit available to employers hiring individuals from certain targeted groups. Employers must identify eligibility during hiring and submit the required certification within prescribed timeframes. As a result, the onboarding process largely determines whether the credit can be claimed.

That can be difficult in senior living, where hiring often occurs at the community level while tax reporting is managed centrally. When screening and documentation vary by location, information about eligible hires may never reach the team responsible for claiming the credit. The risk increases with hiring volume and portfolio size.

While WOTC officially expired on December 31, 2025, reauthorization is widely expected. Following prior hiatus periods, the credit was retroactively reauthorized, and eligible employees during the period qualified for the credit.

Employers are encouraged to continue screening hires, submitting applications, and maintaining documentation to support eligibility. Timely implementation of processes to capture the credit improves success, as it’s often difficult to collect the data for employees who may have turned over during the hiatus period.

Capturing more workforce credits

For senior living and care organizations already participating in the WOTC program, a more consistent process can help capture credits that might otherwise be missed. An experienced WOTC advisor can help evaluate existing programs and coordinate screening, documentation, and certification across locations, including during a transition from another provider. Capturing available credits can help reduce income tax liability and preserve cash for reinvestment as organizations grow.

Other federal, state, and local workforce programs can present similar challenges. The practical question is whether the expected benefit supports a consistent process for screening, certification, and record retention across the organization. A well-designed process can improve credit capture without changing hiring decisions, support margins, and provide better visibility into portfolio economics.

Explore more senior living trends in our 41st annual SNF Cost Comparison and Industry Trends Report.

Growing your organization? Review state and local tax requirements

Geographic growth can broaden your tax footprint faster than processes adapt.

Changes in operating or ownership structure can create state and local tax obligations that receive less attention than the underlying transaction or market entry. Because these changes may affect entities differently, analyze the operating and ownership structure rather than focusing only on where a community is located.

Growth within existing markets deserves the same attention. Adding ancillary services or new revenue streams can change your state and local tax obligations, even when your geographic footprint stays the same. Planning should address how those activities are classified and taxed, along with opportunities to reduce the associated tax burden.

State tax nexus

Nexus — the level of connection between a business and a state or locality (e.g., county, city, town) creating a tax obligation — is often the starting point.

Physical locations remain important, but they’re not the only consideration. Employees, management activity, ownership interests, and revenue can create tax return filing requirements even when the organization doesn’t own or operate a facility in the state.

Tax processes don’t always keep pace as operating structures become more sophisticated. New activity can create income, franchise, payroll, property, or other tax obligations before you realize your organization has entered a state’s or locality’s tax system.

Sales and use tax considerations

Sales and use tax also warrant attention as service offerings and purchasing models evolve. Because taxability varies by jurisdiction, a process for one state or locality may not work in another. The review should address both what you sell and how you purchase taxable goods and services.

State and local tax credits and incentives

Expansion can also create planning opportunities. Depending on the jurisdiction, facility investment, job creation, and employee training may qualify for state and local tax credits and incentives. Because many programs require approval before a project begins, evaluate them alongside site selection and project planning.

Compliance gaps often surface during an audit, financing, or transaction, when options are narrower and remediation is more costly. Building a multistate review into expansion planning and acquisition diligence can identify obligations and incentives earlier, clarify the cost of entering a market, and keep tax processes aligned with your operating strategy and mission.

Industry case study: How CLA’s advice helped Forefront Living’s expansion boost net income and occupancy rates

Property tax considerations for senior living providers

Senior living and care operators are taking a more active role in real estate ownership. Historically, many concentrated on operations while outside investors captured much of the appreciation in the underlying property. Operators are now considering ownership positions, joint ventures, and development structures allowing them to participate directly in the value they help create.

Greater ownership participation changes both the investment’s return opportunity and tax profile. Property taxes are often among the largest recurring costs of senior living real estate and can change materially as a property or its ownership evolves. Consider the estimated costs during underwriting and diligence rather than treat it only as a post-close compliance matter.

Expanding or renovating an existing campus also warrants an early property tax review. Project feasibility should account for anticipated assessed values and resulting property tax costs, along with any jurisdiction-specific incentives that may help offset those costs.

Property tax analysis extends beyond land and buildings. Business personal property taxes may apply to furniture, fixtures, equipment, technology, and other tangible assets used in operations.

The importance of quality fixed asset records

These taxes generally require periodic reporting and valuation, making the quality of fixed asset records important. Incorrect property classifications, disposed assets remaining on the books, or unsupported values can affect assessments year after year.

As portfolios grow, inconsistencies in asset records and filing practices can multiply across jurisdictions. A disciplined review can align reported property with the assets the organization owns and uses while identifying valuation or classification issues affecting cash flow.

Addressing property taxes during underwriting, diligence, and post-close integration provides a more reliable view of asset performance and the economics of an acquisition or development. It can also help preserve resources for resident-centered operations and future investment.

How CLA can help senior living providers with tax planning

A single growth decision can affect hiring, expand your tax footprint, and change property tax exposure. Acquisitions may add another layer of risk when legacy practices and records haven’t been reviewed.

CLA can help senior living providers evaluate workforce incentives, multistate and local tax obligations, and property tax exposure together as part of expansion planning, acquisition review, and post-close integration. Our team can help you identify potential savings, understand compliance requirements, and plan for tax costs — supporting informed growth decisions while preserving resources for resident care.

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