Fair offer for the family on the proceeds of the sale of the house

my A 92-year-old father is in a retirement home. He benefited from the Fair Deal loan and, after the three-year limit, sold his home and placed the money in his bank account. He now pays more than € 725 per month, plus his pension for his care, which is about € 1,500 per month.

Other patients with him told him that they were only paying their pensions. They are much younger than him, but have given up their property / land to avoid large payments before going to the retirement home. This includes a man who was not even married.

Is it too late for my father to give his family savings?

Ms C.McD., Email

In short, yes, that's it.

The Fair Deal program works by getting a contribution from patients for their care. The contribution is based on their income and badets – savings, investments and land or property.

Upon your acceptance into the Fair Deal program, 80% of your income – including investment income and pension – is considered your financial contribution to the cost of your care. If your spouse or partner is alive, this number is halved.

In addition, a charge of 7.5% of the value of any badet, such as land or property, is also deducted as part of your contribution to the cost of care.

Critically, in the case of the family home, this tax is capped at three years. This means that during the first three years of your care, you must pay 22.5% of the value of your home in the cost of your nursing home care. Subsequently, no further charges are brought against the family home.

As for the contribution of income, these annual and global contributions are halved in the case of a couple.

From your mention of the three-year cap, I guess you know the structure pretty well so far.

When your father – or your family – seems to have misjudged or misunderstood the plan, at least to the extent that keeping the value of the badets in the family is tantamount to selling the family home after the three-year ceiling period. Essentially, the money raised through the sale now comes into play. As the family home no longer exists, the three year cap either.

The 7.5% annual tax on the value of the property now becomes a 7.5% tax on funds from the sale – and this tax is not limited in time. It runs as long as the proceeds of the sale exist.

Similarly, if the property is rented while the owner is in a retirement home under the Fair Deal, 80% of the rental income received, after deducting a few deductions such as income and other taxes due, will to the cost of care.

Housing crisis

This is one of the reasons why thousands of properties are vacant but unavailable in the state. They could be rented to help alleviate the housing crisis, but it does not make financial sense for families to do it.

You refer to other patients in your father's retirement home who disposed of their property or holdings before applying for the Fair Deal. I'm sure it happens, but it's a bit more complicated than you think.

The Fair Deal provides for a recovery mechanism, both in terms of revenues and badets. Thus, if a person sells or has badets at rates that are lower than market rates, up to five years before applying to the Fair Deal, the value of that badet will be included in the calculation of its badets and of his income – and 7.5% of the value will be required as part of the annual payment even if the person no longer owns the badet.

It is a simple anti-abuse measure put in place specifically to block unscrupulous claimants who have the means to contribute to their care but who decide instead to leave the state – that is, to other taxpayers – badume a heavier financial burden for such care.

Given that Ireland and people 's attachment to land and property are what they are, I am skeptical about the number of those who will have the foresight to know that. they will need care in a nursing home for more than five years in the future who are willing to provide valuable personal information. financial badets to third parties on this basis.

In your case, the bottom line is that once the family home has been sold, it can not be recovered. The money generated by the sale then becomes a financial badet and will be subject to an annual fee of 7.5% as long as your father uses the equitable distribution system.

Please send your questions to Dominic Coyle, Q & A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email at [email protected]. This column is a reading service and is not meant to replace the advice of a professional.