Key Post Tax relief on nursing home fees

Brendan Burgess

Brendan Burgess

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From IT 6 A Guide to claiming health or medical expenses

At which tax rate is the relief given?

Rate of tax at which relief is allowed over different years
|2007 | 2008 | 2009 | 2010
Health Expenses |Highest Rate| Highest Rate| Standard Rate | Standard Rate
Nursing Home Expenditure| Highest Rate| Highest Rate | Highest Rate| Highest Rate


So, if a resident is charged separately for medical expenses while in the nursing home, they should only claim the relief at 20%?

What if they get charged separately for other expenses e.g. entertainment and activities?

If you pay the nursing home fees on someone else's behalf, you can claim the tax relief.


You may claim tax relief in respect of the cost of certain medical expenses paid by you.
...

What if more than one individual contributes to the cost of qualifying health care?

Where more than one individual contributes to the cost of qualifying health care, each individual can claim relief in respect of the portion paid by them.


...
I am a PAYE worker paying monthly nursing home fees for my mother – Is it possible for me to get the tax relief due on these fees through the PAYE system during the tax year instead of waiting until at the end of the tax year?

Yes, in certain circumstances relief may be granted during the year.
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[FONT=&quot]From [broken link removed]
[/FONT]
[FONT=&quot]14. Tax relief in respect of care received in a nursing home or hospital[/FONT]
[FONT=&quot]Tax relief is allowable provided the expenditure is necessarily incurred in the provision of maintenance and treatment required on the advice of a practitioner or diagnostic procedures carried out on the advice of a practitioner. Where the expenditure incurred relates to nursing home costs relief will only be allowed where access is provided to 24 hour nursing care on-site. Relief in respect of qualifying nursing home expenditure will be allowed at an individual’s marginal rate of tax.[/FONT]


[FONT=&quot]Meaning of hospital, nursing home / maternity home or other similar institution[/FONT]

[FONT=&quot]Hospital means:
[/FONT]


[FONT=&quot](c) any hospital, nursing home, maternity home or other institution approved of for the purposes of this section by the Minister for Finance after consultation with the Minister for Health and Children.[/FONT]
 
While the taxpayer must wait until the end of the year for normal medical expenses, they can claim during the year for nursing home fees. From IT6
I am a PAYE worker paying monthly nursing home fees for my mother – Is it possible for me to get the tax relief due on these fees through the PAYE system during the tax year instead of waiting until at the end of the tax year?

Yes, in certain circumstances relief may be granted during the year. You should contact your local tax office with details of your claim. If the claim relates to the year 2010 and subsequent years of assessment the nursing home in question must provide access to 24 hour nursing care on-site.
 
One point to add: If family members are sharing the expense, they should ensure that only members who are on the highest tax rate actually set up the payments to maximise the benifits.
 
A typical case; elderly parent has savings and now needs full time nursing home care.

A few grown up children now with their own families, mortgages and usual family expences.

The nursing home resident simply transfers money to one of their working children’s accounts, who then pays the bill and claims tax relief at their higher rate.

This would mean that the nursing home resident would be able to fund their own care substantially longer without having to burden their already financially stretched children.

To me the nursing home resident is paying the bill, even if the cheque is coming from one of their children and as such the son/daughter is not entitled to tax relief on these costs.

I am aware of several such cases, some have been advised by financial professionals that this is the way to go.

It must be blatantly obvious that this is what’s happening in many cases.

Is this legitimate or does revenue just turn a blind eye ?
 
Can I ask whether the scenario above could apply where the elderly parent is availing of the Fair Deal nursing home support scheme?
 
Yes,

Typical nursing home costs of €50K - €70K annually are beyond the means of most.

Fair Deal just makes nursing home care available to all who need it, your contribution is based on the persons income and assetts, the more they have the more they pay, but most peoples contribution paticularly if they have a home and opt not to avail of the life loan would still be substantial.

Your contribution, big or small would be eligible for tax relief either by the elderly person themselves or another person who pays these fees on their behalf.
 
I have been asked a question about paying for a carer in the person's home.

I presume that this does not qualify for tax relief in any way?

Or would it count if the doctor prescribed it?
 
Can we claim tax relief on the cost of home care?
Yes you can. Our clients or their family can avail of income tax relief of up to 41% on payments to Home Instead Senior Care of up to €50,000 per annum. The tax credit can be adjusted so that the relief will apply on a monthly basis rather than annually, which may otherwise be the case. We also advise families to avail of home care grants, which can be applied for through your local health centre.
We would be happy to discuss in detail how you can go about claiming tax relief on home care fees. Contact your local home care office for further information.

http://www.homeinstead.ie/about_us/faqs.aspx


Why should we employ a CAREGiver from Home Instead Senior Care rather than privately?
When recruiting privately, it is your responsibility to check their background and to ensure that their PAYE and PRSI are taken care of. You become their employer and have to make sure that you have Employers and Public Liability Insurance to cover the carer in your home and also when the CAREGiver is providing local transport.
There is no guarantee that they are trained to meet your needs and there are no Quality Care Managers in place to monitor the quality of the service. If your carer is sick or on holidays there is no back up available to provide a replacement.

(I’d say if tax relief was not allowed for any reason on privately hired carers then it would say it here)

 
Can I just clarify a few points here. My dad is in a nursing home under the fair deal scheme and paying in the region of 2500 per month for the past year. This is the amount agreed with the fair deal including the house valuation. As my parents are not in the tax net would you think it would be ok for a family member to pay this monthly sum and claim tax relief and for my mum to refund that family member.Ii understand the fair deal scheme is based on a persons means and the tax office seemed to think this would be ok. Any opinions appreciated
 
Meath Lady said:
As my parents are not in the tax net would you think it would be ok for a family member to pay this monthly sum and claim tax relief and for my mum to refund that family member.Ii understand the fair deal scheme is based on a persons means and the tax office seemed to think this would be ok.
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Revenue are probably turning a blind eye to it in the same way that they turned a blind eye to non resident accounts. As the amounts are significant I don't think Revenue would approve of this at all.

How did you form the impression that "the tax office seemed to think this would be ok"

I would imagine that the only, barely, acceptable approach would be that you pay your father's nursing home fees and you claim tax relief. By doing so he will have more in his estate to leave behind him.
 
I am looking into this and somewhat confused.

Here is the scenario - a relative may need nursing home care at some stage and we are trying to plan ahead and determine whether he and/or I should pay the nursing home charges ourselves (bypassing the Fair Deal scheme) and claim tax relief. He is a widower in his late seventies and I am a single public servant

His gross income: 34,000 occupational pension plus 12,000 widowers pension
His net income: I think it is about 38,000. I'm not sure what rate of tax he pays.

My gross income: 56,000
My net income; 33,000

Let's say nursing home cost is 1000 euro per week or 52k per year, what would be the best way to do this. Can anyone do a quick calculation or advise on the best approach.

I have decent savings and low expenses. I currently save a high percentage of my net income and it would be feasible for me to pay a few hundred per week out of my net income and then claim tax relief at the end of the year.

Thanks
 
You both pay 41% tax above €32,800 so he would pay €11,000 and get a deduction for that at the high rate.

I imagine you have a pension related deduction of about €10k and the pay high rate of tax on about €13,000 so you would get a deduction at the high rate on that.
 
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