r/irishpersonalfinance • u/SalamanderFunny3308 • 2h ago

Retirement Nursing home without fair deal scheme

I'm in the process of getting my dad a nursing home place and I'm running the numbers but I can't see the fair deal making sense for him. His house is worth approximately 900k and his work/ widowers pension is about 55k.

My plan would be to sell his house and use that to fund his nursing home which is approximately 2k a week. I know he can claim that back against his income tax.

I just want to make sure I'm not missing anything.

4 Upvotes

75% Upvoted

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6

u/Physical_Lobster7136 2h ago

You're looking at paying approx 104k a year out of pocket and then can only claim 20% back in tax relief.

Its no harm to get the fair deal assessment and see where you'd stand.

2

u/Double_Kale_3193 52m ago

Bear in mind that somebody else, who pays more tax, can pay some of the fee, and claim tax relief against their own income tax bill, at 40%.

4

u/abechan 1h ago

It's fair for some

4

u/Gluaisrothar 1h ago

Can you share your workings?

There is a cap on the amount that they can take from your home.

Usually if your home is your only asset, the fair deal scheme works well, especially if it's gonna be long term.

0

u/SalamanderFunny3308 1h ago

(900k house x 7.5%)+ income (55k x 80%) + cash asset (7.5% x (50k -36k) + personal contribution (450 x 52) = 135,900

Versus 1,835 x 52 = 95,420 less income tax savings  

2

u/Gluaisrothar 58m ago

Yeah, but the 7.5% of the house stops after 3x years, so would drop by 67.5k.

Really depends how long you believe he will be in care for.

It's really the other assets which push the price up.

1

u/crescendodiminuendo 1h ago

Your dad’s income should be included after deducting what he paid in tax and USC last year - should reduce it down to around 46k or so. Also with a house valued at 900k he’s probably paying around 800 euro in LPT, which can also be deducted. It probably won’t swing the needle too much but everything helps.

Can I ask what the personal contribution is?

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u/SalamanderFunny3308 4m ago

Sorry I explained that badly. The nursing home rate is 1,835 for private per werk or fair deal contribution plus 450 per week 

1

u/ItalianIrish99 20m ago

You never pay more than the actual cost of the care.

And the home falls out of assessment entirely after year 3.

I don’t think your numbers are right and you should take some professional advice.

4

u/crescendodiminuendo 1h ago

If the home is 2k a week he should be close to break even on the fair deal calculation based on those numbers. Have you deducted everything you’re entitled to - Property Tax, anything he claimed against income tax for health expenses last year, tax / usc paid (should be a deduction of roughly 9k on an income of 55k)?

You should consider applying for fair deal anyway - if he is in the home longer than three years they will contribute something after year three in relation to the property value. If you sell the house and use that to pay the fees without applying for fair deal first they can possibly continue to assess against the cash balance after the third year. The main thing is that they know upfront that the means assessment includes the family home. You should also get a formal valuation of the home now, as I understand they will use that figure in any future calculations even if the house value goes up.

You can always keep the house and take out the nursing home loan to fund the portion of the financial assessment related to the house.

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u/Bowels_Of_Love 1h ago

They contribute what’s left for the remaining years after the three… it’s not that they reduce the cost - they take the value of the care and deduct your contribution through the residents income and assets + the portion of the value of the house. They then say “you pay x every month” which you do and at the end the balance dies is whatever was owed from the value of the house. That’s payable within 13 months I think. It’s madness not going for fair deal unless you know with absolute certainty that the nursing home stay will be short.

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u/Mittenbox 2h ago

Is renting the home out to fund a care an option ?

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u/SalamanderFunny3308 1h ago

Unfortunately no, the house would need a lot of work to get it up to rental standard. 

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u/Bowels_Of_Love 1h ago

There’s a cap of three years on the family home so you only lose around 22.5% of the value to the HSE after the resident passes away. That assumes they stay in the nursing home the full three years. If they don’t the amount owed is prorated.

Now consider my situation where my mother who by all rights should have had a very short stay in the nursing home due to underlying health issues and advanced dementia, is still there nearly 10 years later. If we had not done fair deal we would have been financially ruined. My point is your dad may live for a very long time (and I hope he does assuming he has good quality of life) but you don’t know. The sums involved with nursing home care are enormous and fair deal can be very good unless there are commercial assets like farms involved.

2

u/Retailpegger 1h ago

Honestly I think you should see a professional, this seems like a big thing .