SECTION 3. DEFINITIONS FOR

RESIDENTIAL LIVING FACILITY SAFE HARBOR

The following definitions apply for purposes of this revenue procedure:

.01 Qualified Residential Living Facili- ty . Except as provided in sections 3.02 and 4.04 of this revenue procedure, a “qualified residential living facility” is a residential living facility that:

(1) Consists of multiple rental dwelling units within one or more buildings or structures that generally serve as primary residences on a permanent or semi- permanent basis to individual customers or patients;

(2) Provides supplemental assistive, nursing, or other routine medical services; and

(3) Has an average period of customer or patient use of individual rental dwelling units of 30 days or more.

.02 Section 168(e)(2)(A) test . A residential living facility that qualifies as residential rental property under section 168(e)(2)(A) satisfies the requirements in section 3.01(1) and (3) of this revenue procedure.

.03 Average period of customer or pa- tient use .

(1) In general . The “average period of customer or patient use” is determined by dividing: (i) the sum of the total number of days in the taxable year that each customer or patient resides in a rental dwelling unit of the residential living facility, which may be determined by reference to a rental contract or other formal written lease agreement, or by the number of days paid for by Medicare or Medicaid; by (ii) the total number of individual residential customers or patients that reside in all of the rental dwelling units of the facility for the taxable year. For this purpose, a married couple residing in a single rental dwelling unit of the residential living facility will be counted as one individual customer or patient, unless each spouse is separately properly treated as an individual customer or patient of the residential living facili

ty that receives supplemental assistive, nursing, or other routine medical services from or on behalf of the residential living facility. Days in which a rental dwelling unit of a residential living facility are not occupied are not included in the calculation of the average period of customer or patient use.

(2) Example . Facility has 100 rental dwelling units. Of the 100 units, 60 units are occupied by the same customer or patient for the entire year, 25 other units are occupied for 360 days of the year with each customer or patient occupying a unit for 90 days, and the remaining 15 units are occupied for a total of 10 months (March through December = 306 days) of the year. Of the 15 units occupied for 10 months of the year, 10 units are occupied by customers or patients during the entire months of March through July (153 days) and by different customers or patients during the entire months of August through December (153 days), for a total of 20 customers for the 10-month period. For the remaining 5 of the 15 units that are occupied for 10 months of the year, 5 customers or patients occupy the units for 8 months (May through December = 245 days) of the year, and 5 other customers or patients occupy the units for 2 months (September and October = 61 days) of the year. The average period of customer or patient use is determined by dividing the sum of the total number of days in the taxable year that each customer resides in a rental dwelling unit, by the total number of individual residential customers or patients that reside in all of the rental dwelling units for the taxable year. The total number of days in the taxable year that the customers or patients reside in the rental dwelling unit is 35,490 days [21,900 days (60 units that are occupied for the entire year x 365 days per year) + 9,000 days (25 units that are occupied for 90 days each x 90 days x 4 90-day periods) + 4,590 days (15 units that are occupied for 10 months x 306 days)]. The total number of individual residential customers or patients is 190 [60 customers or patients occupying a unit for the entire year + 100 (25 customers or patients occupying units for 90 days each x 4 90-day periods in a year) + 20 customers or patients that occupy a unit for a 5-month period + 5

customers or patients that occupy a unit for a 8-month period + 5 customers or patients that occupy a unit for a 2-month period]. Accordingly, the average period of customer or patient use is approximately 187 days (35,490/190).

.04 Supplemental assistive, nursing, or other routine medical services . “Supplemental assistive, nursing, or other routine medical services” are personal and professional services that are customarily and routinely provided to individual residential customers or patients of nursing homes, assisted living facilities, memory care residences, continuing care retirement communities, skilled nursing facilities, or similar facilities, as needed, on a day-to-day basis. Such services generally do not include surgical, radiological, or other intensive or specialized medical services that are usually provided only in emergency or shortterm in-patient or out-patient hospital or surgical settings.

.05 Permanent or semi-permanent basis . The rental dwelling units of a residential living facility serve as primary residences on a “permanent or semi-permanent basis” to customers or patients whose use of the units is generally long-term (30 days or more) in nature, even though some customers or patients may arrive at the residential living facility with significantly shortened life expectancies due to advanced age or terminal medical conditions, and some customers or patients otherwise may be expected to periodically reside away from the residential living facility, such as at the primary residence of a spouse or other relative, for short periods of time.