I've been wrestling with this on my mom's taxes for her first year in assisted living. I've read the few paragraphs on long-term care in p502 and it is not clear to me because it says if in assisted living "to get medical care." The problem is that p502 doesn't provide definitions.
She has an assessment and personal care plan from a medical professional (RN), is under care for COPD and diabetes, and meets the assistance with two activities of daily living criterion (bathing and transferring). So I'm going with all costs are deductible above the 7.5% hurdle.
I'm doing similarly with my Dad.
For me, the relevant question is "Why is my Dad living where he is?" Before, when he was in independent living, it was because it was a nice community with fun planned activities and a nice dining room and they were at the age where they didn't want to deal with home maintenance.
Now, he's in assisted living because he needs the medical care they provide - the on call med techs he can summon with his pendant, help with ADLs, medication management, help getting up from falls, etc. That very much sounds to me like he's there because he needs to be there for the medical care aspect. Yes, it's still a nice place (he's in a CCRC-type place), but "a principal reason" is for medical care. I think it's important that it doesn't say "the principal reason"; as long as it is "a principal reason" that meets the IRS language. I also haven't seen any bright line definitions of "X out of 5 ADLs" or anything, but it's possible those are in another IRS document somewhere that I just haven't seen yet.
I haven't bothered, but I suspect if you drilled down, you could find the underlying federal law somewhere in 26 USC, and the language would be even more general in nature and would also delegate the development of regulations about it to the Secretary of the Treasury, because the IRS is part of the Treasury Department.
In fact, somewhere at the beginning of the Schedule A instructions, it does lay out a general rule about medical expenses; all the specific examples about acupuncture or nursing homes or durable medical equipment or cosmetic surgery is IMHO the IRS giving specific examples on common questions that people have had in the past.
You could also ask the IRS and they would maybe give you non-binding guidance. I wish you the best of luck in reaching them on the phone or in person.
Or you can do like I do which is do my level best to reasonably comply with a common sense understanding of tax law in a way that lets you sleep at night, and then talk it over with the IRS agent if ever audited.