Qualified medical expenses are deductible. Generally, for nursing home expenses to be considered ‘qualified’, the person receiving care must be unable to perform at least 2 activities of daily living (eating, toileting, transferring, bathing, dressing, and continence) without assistance for at least 90 days; or require substantial supervision to be protected from threats to health and safety due to severe cognitive impairment. These rules would seem to rule out deductibility for “Independent Living” and possibly “Assisted Living”, depending on the level of assistance. Expenses for at least some, if not all, “Memory Care” and “Long Term Care” are more likely to be deductible. Note: I have filled out a number of tax returns for taxpayers who have a spouse in a nursing home who are able to deduct enough medical expenses to nearly or completely eliminate their entire Federal tax liability.
See IRS Pub 502 2021 Publication 502 (irs.gov) for additional details on how to determine what ‘qualified medical expenses’ are.
Not sure that I agree with that, since the 15% Federal capital gains rate doesn’t kick in until over $83k for MFJ (which you seem to be discussing), and once you add in just the standard deduction (no medical deductions), capital gains will be taxed at 0% for income up to at least $105k (more if one or both are over 65). That’s above the $96k in expenses that you are suggesting, so it doesn’t seem that even accounting for 6% in state taxes that you would reach the level of income to average 21% in capital gains taxes in order to pay for the expense that you suggested. Plus, capital gains are only taxed on the gain - not the entire income received.
That’s a question for the care facility to answer, although I would agree with @Borgney that the costs are likely dependent on the level of assistance that is needed for each resident. It’s also possible that depending on the level of assistance needed, the couple may need to be housed separately, so there wouldn’t be a ‘second person’ in the same apartment.
AJ