Fair deal or no fair deal

Hi all

Have been crunching the numbers - time has come for my elderly mother to go to a nursing home and we are considering the options. Have read up on the threads on the site and as always they are helpful. Would be interested in opinions on what’s best. The home is 1200 per week. If we do the fair deal scheme then it will be:
Her house: value around 350k so 7.5% of that for up to 3 yrs
Her savings: Approx 70k so 7.5% of that after allowance of 36k
Her pension: basic SW pension of 277e per wk

Would funding it privately (at least for 1 yr) make any sense?
Use pension so roughly 1000e per month
Rent out house for roughly 2k per month
Fund balance from her savings

Wondering if the rent would be fully taxable or can this be offset as its funding her care. Know nothing about being a landlord so appreciate advice on that. If we had to contribute (as taxpayers on higher rate) would we be able to offset some of that?

Any thoughts and advice welcome.

Thanks

Ballymag said:

Rent out house for roughly 2k per month

Click to expand...

This sounds optimisitic for a house worth €350k.

Your case might be different, but most houses of nursing home residents need some modernisation to get them to a place where they can command a good price.

Ballymag said:

Would funding it privately (at least for 1 yr) make any sense?

Click to expand...

This depends a lot on your own means. Do you have siblings? Would they contribute? For how long?

I'm an only child so this stuff will be straightforward for me when the time comes. But I've seen a lot of siblings have disagreements over this over the years.

Ballymag said:

Wondering if the rent would be fully taxable or can this be offset

Click to expand...

Your mother would be taxable, not you, as she owns the house. Rent of €24k after costs means very little income tax, no PRSI and less USC due to her age. I don't know the precise numbers but tax is not going to make a difference to the calculations here.

Ballymag said:

Hi all

Have been crunching the numbers - time has come for my elderly mother to go to a nursing home and we are considering the options. Have read up on the threads on the site and as always they are helpful. Would be interested in opinions on what’s best. The home is 1200 per week. If we do the fair deal scheme then it will be:
Her house: value around 350k so 7.5% of that for up to 3 yrs
Her savings: Approx 70k so 7.5% of that after allowance of 36k
Her pension: basic SW pension of 277e per wk

Would funding it privately (at least for 1 yr) make any sense?
Use pension so roughly 1000e per month
Rent out house for roughly 2k per month
Fund balance from her savings

Wondering if the rent would be fully taxable or can this be offset as its funding her care. Know nothing about being a landlord so appreciate advice on that. If we had to contribute (as taxpayers on higher rate) would we be able to offset some of that?

Any thoughts and advice welcome.

Thanks

Click to expand...

Sorry not clear. Have you found residential care for her or you wish her to stay longer in her own house

Her réntal income is assessed for fair deal too. 80% is my understanding

The FD is simple.. It funds the delta in cost between her assets and income and actual cost per week. Any shortfall made up by State. So no necessary to rent your mother's home....

If you or your siblings pay all or some of the Nursing home fee, you can claim tax relief at your max rate.

Crunch the numbers and see what works.

Main points:

1. My advice would be not to rent or sell the house.
2. If you sell all the proceeds will be assessed and might well mean zero subvention.
3. If you rent, you have to register with PRTB, pay tax on the income and have to manage tenants. Post tax rental income will also be included in the Fair Deal Assessment.
4. Fair deal loan means a max of 22.5% of house value is repaid after your Mother passes away

In every scenario you have available to you, it is worth taking the Fair Deal. If you choose to rent out the house, it is marginal in the first 3 years due to valuation of your mother's PPR. The above are crude calculations, assuming savings do not reduce, that rent is constant(it wouldn't be) and that there are no management expenses etc(there will be). In reality, if you pay out of your mum's savings, the assessment will reduce each year. Tax will be payable on most of the rent but can be offset against the nursing home costs. Bear in mind that your mother will edge over the tax band into 40% if the rent is as projected. You can claim tax relief if you pay the FD contribution but you are not allowed to be reimbursed from her funds.
The hassle of renting may not be worth what the estate will gain after tax/Fair Deal but it might be a good idea to have somebody in there keeping the house warm/maintained.

Many thanks for the replies. We have a nursing home and she will be going to it. Really just questioning whether to use fair deal or fund it from her savings, renting her house and her small pension. Am an only child so issues with siblings don’t apply. Not fully clear - if we were using the rental towards the nursing home fees, how much of say a 2k rental fee would go in tax bearing in mind her only other income is her social welfare pension of 277e per wk.
If we do go with fair deal I would not be renting or selling her house.

Having gone through the process of visiting nursing homes and applying for Fair Deal quite recently, there are more things to consider (apologies if you know all this already).
The nursing home might have a different price depending on whether your mum avails of Fair Deal or not. In our case the Fair Deal price was a lot cheaper (approx 25%).
There are often extras or a service charge - this can range from zero to a couple of hundred euro a week.
The nursing home may not have availability. You might be ready to take a place now, but it could be months before one is free. You could put your mum‘s name on the list even if you’re not ready to take a place yet. (We put my mum‘s name on 3 lists).
The nursing home will want to know whether you plan to avail of Fair Deal or not - and whether you would consider taking a place (at full price) if your mum needs it before Fair Deal comes through.
The Fair Deal application process takes a while. I think it took us about 3 months, but that is as good as it gets - it often takes much much longer. I give my sister credit for this, she was very thorough regarding all the paperwork and making phone calls to ensure all the necessary documentation was submitted to the right people at the right time in the correct format. (She doesn’t live in Ireland - but was able to do most of this from abroad. While the rest of us managed day to day stuff, and followed up on any paperwork she told us to sort out).
Do you know where your mum’s house deeds are - this was one of the headaches we had to deal with during the process.
Be kind to yourself, it’s a hard decision, even when it’s the right one. We were lucky in that we had visited nursing homes before Covid, and there were 4 of us involved in big decisions even though we split up some of the essential tasks. It’s tough if you’re on your own.
My mum went into our first choice of Nursing Home, during Covid. It was the right decision and she is happy there. If Covid hadn’t happened she’d have lots of visitors and we’d take her out regularly - please God we‘ll be able to do that before too long. In the mean time we have to make do with phone calls and window visits.

Ballymag said:

Really just questioning whether to use fair deal or fund it from her savings, renting her house and her small pension.

Click to expand...

I would leave the house empty and avail of Fair Deal now rather than at a later stage.

Putting aside the stress and hassle of being a landlord and even if there is no tax liability on the rental income, around €425 per week would still be needed from your mothers savings to meet the shortfall. That is before you take into account expenses associated with renting the house. There will also be additional nursing home charges for activities, hairdressing etc. Your mother will still need clothes, shoes etc. The €70K savings will not last long.

What are the potential advantages that have you considering renting the house and paying the nursing home privately ?

Yes I think it’s likely we will go with Fair deal. Will apply for it straight away. She was managing at home up to 2 weeks ago but a standard illness has resulted in a dramatic decrease in her mobility. She is staying with me but going in to the nursing home tomorrow for 2 weeks respite. This will hopefully build her up a bit and give me some much needed head space to get something long term sorted. At 1300 per week for the private rate it will eat into her savings but we don’t have another choice. Most importantly she will get good care.

A relation of mine has entered a nursing home under the fair deal. Her contribution to care is approx €700 per week . It is being funded out a combination of savings and pension income.
Can she claim income tax relief on her contribution to the fair deal.

fernrock said:

Can she claim income tax relief on her contribution to the fair deal.

Click to expand...

Yes.

Nursing Homes Support (Fair Deal) Scheme​

The Health Service Executive (HSE) can assist you with the cost of your nursing home care. You cannot claim tax relief on the amount paid by the HSE. You can only claim tax relief on the amount you pay yourself.

Click to expand...

ClubMan said:

Yes.

Nursing home and additional nursing care expenses

This page outlines how to claim relief on nursing home expenses under certain circumstances

www.revenue.ie

Click to expand...

yes it is on the amount paid by the person concerned that the tax relief is being sought.

Deleted - ignore.