National Healthcare Properties, Inc.NHP
National Healthcare Properties, Inc. Income Taxes Disclosure
Income Taxes
For the year ended December 31, 2025, the Company elected to prospectively adopt ASU 2023-09. The following table is a reconciliation of the U.S. federal statutory rate of 21% on the income (loss) before income taxes to the Company’s effective income tax rate for the year ended December 31, 2025 in accordance with ASU 2023-09 (dollars in thousands):
Year ended December 31, 2025 | ||||||||||||||
$ | % | |||||||||||||
| US federal statutory income tax rate | $ | (12,100) | 21.0 | % | ||||||||||
| Domestic federal | ||||||||||||||
| Nontaxable and nondeductible items | ||||||||||||||
| REIT and OP taxable income not subject to tax | 10,692 | (18.6) | % | |||||||||||
| Other | (179) | 0.3 | % | |||||||||||
| Changes in valuation allowances | 1,874 | (3.3) | % | |||||||||||
| Other | (126) | 0.2 | % | |||||||||||
| Domestic state and local income taxes, net of federal effect | 163 | (0.3) | % | |||||||||||
| Increase in state valuation allowance | (163) | 0.3 | % | |||||||||||
| Total | $ | 161 | (0.3) | % | ||||||||||
In 2025, 2024 and 2023, state and local income taxes in California, Tennessee and Texas comprised the majority of the state and local income taxes, net of federal effect category.
Significant components of the provision (benefit) for income taxes are as follows (dollars in thousands):
| Year ended December 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||
| Current | Deferred | Current | Deferred | Current | Deferred | |||||||||||||||||||||||||||||||||
Federal benefit expense | $ | — | $ | 1,874 | $ | — | $ | 1,936 | $ | — | $ | 1,023 | ||||||||||||||||||||||||||
| State (expense) benefit | (162) | (163) | (262) | 461 | (303) | 142 | ||||||||||||||||||||||||||||||||
| Deferred tax asset valuation allowance | — | (1,711) | — | (2,397) | — | (1,165) | ||||||||||||||||||||||||||||||||
Total income tax expense | $ | (162) | $ | — | $ | (262) | $ | — | $ | (303) | $ | — | ||||||||||||||||||||||||||
Significant components of the Company’s deferred tax assets and liabilities are as follows (dollars in thousands):
Year ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
Deferred tax assets: | ||||||||||||||||||||
| Net operating loss carryforwards | $ | 11,930 | $ | 10,078 | $ | 7,555 | ||||||||||||||
Allowance for doubtful accounts | 187 | 390 | 470 | |||||||||||||||||
Deferred rent | 297 | 330 | 229 | |||||||||||||||||
| Other | 5 | — | — | |||||||||||||||||
| Total deferred tax assets | 12,419 | 10,798 | 8,254 | |||||||||||||||||
| Less: Valuation allowance for deferred tax assets | (12,182) | (10,471) | (8,074) | |||||||||||||||||
Net deferred tax assets | 237 | 327 | 180 | |||||||||||||||||
| Deferred tax liabilities: | ||||||||||||||||||||
| Depreciation | (234) | (327) | (180) | |||||||||||||||||
| Other | (3) | — | — | |||||||||||||||||
| Total deferred tax liabilities | (237) | (327) | (180) | |||||||||||||||||
| Net deferred tax assets (liabilities) | $ | — | $ | — | $ | — | ||||||||||||||
Net deferred tax assets are included in prepaid expenses and other assets, net on the Company’s consolidated balance sheets.
As of December 31, 2025 and 2024, the Company had no material uncertain income tax positions.
Valuation Allowance
Because of the TRS’ historical operating losses and the adverse economic impacts from increases in the rate of inflation in recent years on the results of operations of the Company’s SHOPs, the Company is not able to conclude that it is more likely than not it will realize the future benefit of its deferred tax assets; thus, the Company has provided a 100% valuation allowance of $12.2 million and $10.5 million as of December 31, 2025 and 2024, respectively.
Net Operating Losses
As of December 31, 2025, the Company’s consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $47.5 million (of which $6.8 million were incurred prior to January 1, 2018). Carryforwards from losses incurred prior to January 1, 2018, if unused, these will begin to expire in 2036. For net operating losses incurred subsequent to December 31, 2017, there is no expiration date. As of December 31, 2025, the Company had a deferred tax asset of $12.4 million with a full valuation allowance.
Income Taxes Paid
Income taxes refunded (paid) for the year ended December 31, 2025 are as follows (dollars in thousands):
Year ended December 31, 2025 | ||||||||
Federal | $ | — | ||||||
State and local | 10 | |||||||
| Total income taxes refunded (paid) | $ | 10 | ||||||
The amount of income taxes refunded (paid) during the year ended December 31, 2025 does not meet the 5% disaggregation
by jurisdiction threshold, and, as such, no further disaggregation is disclosed.
Tax Filings
The Company files income tax returns in the federal, state and local jurisdictions. These tax returns are generally open to examination by the relevant tax authorities for three years from the date they are filed. The Company’s 2022 through 2024 tax returns are currently open to exam. However, the Company has significant net operating loss carryforwards from years before 2022. These years may be subject to exam when the net operating losses are carried forward and used in future years.
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.