fair deal scheme and transfer of home

T

theroux

Registered User
Messages
20
My mother is thinking of transferring the family home to me, her son.

She will continue to live in the home and we will be liable for tax as I live abroad. However my question is about the fair deal nursing home scheme. If at some point after the transfer she decides to be assessed for the scheme I know the home would be included (assuming its within 5 years of the transfer).

What would this mean in practice? It seems to imply on the website that costs from the property are deferrable until after the persons death. But if my mother transfers her home she wont have anything left and thus will have nothing to pay after death. It seems according to the wording below that she is liable after death.

Can anyone elaborate on if there is reason not to do the transfer now?


fair deal at HSE website said:
The person who is responsible for repayment of the nursing home loan to the Revenue Commissioners is called the relevant accountable person. The relevant accountable person may be a different person to the applicant, depending on the circumstances as set out in the following examples:
Example 1: Where you transfer or sell part or all of your property, during your lifetime, you and your spouse/partner will be the relevant accountable persons.
Click to expand...
 
If your mother is giving/gifting you the family home would not therefore feel responsible for her care
 
Black Sheep said:
If your mother is giving/gifting you the family home would not therefore feel responsible for her care
Click to expand...

I dont quite understand your question. Under the scheme there would be an assessment of her assets and then the state basically the pays the bill for her care for anything she cant afford. Thus its makes no difference in terms of responsibility since she will be cared for either way.

What I am wondering about is if she is liable "after" her death, what happens if she has no assets.
 
I think there is a 5 year rule so if she transfers it to you now and in two years time she needs to avail of the fair deal scheme to go into the nursing home then it would be counted as an asset. This is to stop people deliberately transferring property to avoid paying towards their care. If she does not transfer it and needs care then it does not necessarily have to be sold - the state will pay and when she dies it is sold and they recoup the amount.
 
partnership said:
I think there is a 5 year rule so if she transfers it to you now and in two years time she needs to avail of the fair deal scheme to go into the nursing home then it would be counted as an asset. This is to stop people deliberately transferring property to avoid paying towards their care. If she does not transfer it and needs care then it does not necessarily have to be sold - the state will pay and when she dies it is sold and they recoup the amount.
Click to expand...

Thanks for the reply. So if she does transfer it am I right in saying she can't defer payment of it like she can with property she owns?

I understand with property, payment can be defered until after death. Can it still be deferred if the property is transferred? And if so who is liable after the death?

Im just concerned if she transfers it to me and she needs care within 5 years, how will we be expected to pay for the required percentage based on the property (we cant sell the property since I plan to live in it!). Would she simply be denied funding?
 
theroux said:
It seems according to the wording below that she is liable after death.
Click to expand...

The paragraph you quote only applies where the life loan has been granted, if your mother transfers the house to you now, then she no longer owns it and cannot apply for the life loan option under Fair Deal, so there would be no liability after her passing.



theroux said:
Can anyone elaborate on if there is reason not to do the transfer now?
Click to expand...


If you mother passes away within 3 years of entering the nursing home, then it would make little difference whether she transferred her home to you or not, as either way she would have to contribute 7.5% of its value annually towards the cost of her care.

After 3 years, If she was still in the nursing home and still owned the house, the 7.5% of the house value that she had been paying annually, would now be paid by the state as long as she remained in care.

After 3 years, if she was still in the nursing home but had transferred the house to you, then she would continue paying the 7.5% of the house value annually for as long as she remained in care, which could be for many more years.

From a Fair Deal Perspective only, you would have nothing to loose and potentially a lot to gain by not transferring the house now.
 
Many thanks for your post,

twofor1 said:
After 3 years, if she was still in the nursing home but had transferred the house to you, then she would continue paying the 7.5% of the house value annually for as long as she remained in care, which could be for many more years.
Click to expand...

I dont think this is true is it? If she tranfers the house to me, but maintains it as "her principal residence" then from what I can understand the 3 year cap still applies. I dont see why she would "continue" to pay the 7.5% beyond the 3 years...
 
theroux said:
I dont think this is true is it?
Click to expand...

To the best of my knowledge it is.

If your mother transfers the house to you then she no longer owns it, how then can the 3 year cap on the family home apply ?

For arguments sake if the house was worth €100K, and she transferred it to you, although your mother would no longer own the house, she would be assessed as if she had this €100K asset with no 3 year cap, and rightly so.

Your mother has an asset and should be assessed accordingly, why should the state pay more for your mothers care if she chooses to gift her house to you ?

Couldn’t I just transfer my income and assets in order to reduce my contribution?

No, the Scheme contains measures to protect against this. Under the legislation, any income or asset which is transferred within 5 years of applying for the Scheme is taken into account in the financial assessment.

This does not affect your right to sell assets for full market value. Rather it is intended to prevent people from depriving themselves of assets for the purposes of the financial assessment.

http://www.dohc.ie/issues/fair_deal/FAQs_07_2013.pdf?direct=1
 
theroux said:
Many thanks for your post,



I dont think this is true is it? If she tranfers the house to me, but maintains it as "her principal residence" then from what I can understand the 3 year cap still applies. I dont see why she would "continue" to pay the 7.5% beyond the 3 years...
Click to expand...


My understanding of it is that the 7.5% is for 3 years max whilst in the nursing home. The 5 year lookback rule is just an anti-avoidance measure which will stop asset transfers for the purpose of pulling a fast one. If she were to transfer now and within the next 5 years made a fair deal application, it would be 7.5% for 3 years only in the nursing home. A transfer doesn't mean someone is trying to reduce the nursing care charge. There can be a whole host of reasons for transferring property.
 
If the transfer was less than 5 years prior to the application, the value of the property would be assessed as if the transfer had not taken place. The 3 year cap would apply only to the PPR. Any other asset, not transferred prior to 5 years, would continue to be assessed.
 
Also I assume the value would be assessed on the transferred value? The property in question is increasing in value rapidly (20% in the last year it seems). It seems to make sense to me to transfer it now and at least "lock in" the price (this will also benefit me in terms of the tax bill Ill be paying). If we wait the increased value of the property will count against us.

(As it happens, I dont think we will need to go as far as nursing care for a while anyway so Im conscious of the house value increasing)
 
theroux said:
(this will also benefit me in terms of the tax bill Ill be paying
Click to expand...

It must be quiet a valuable house and as such if your mother needed nursing home care in the next 5 years, her contribution would be high.

7.5% annually of a valuable house would be a lot, and even substantial savings would dwindle quickly.

I have a family member in a nursing home for over 4 years now, the part of their contribution based on their valuable home ceased after year 3, had this not ceased their care would now be unaffordable, thankfully though their contribution is now based on their income only, so there is no financial burden on them or us and this will remain the case indefinitely.
 
Theroux, getting back to your original query, I have clarified as follows on the other post:

1. A right of residence is not assessed as means , but

2. A 'Life Interest' is deemed assessable and there is a table to enable the HSE calculate the value of that.

so you may make sure that it is a right of residence that is agreed on transfer.
 
Slim said:
so you may make sure that it is a right of residence that is agreed on transfer.
Click to expand...

The legislation states ‘’ any income or asset which is transferred within 5 years of applying for the scheme is taken into account in the financial assessment’’

Therefore I think theroux’s mother can transfer the house to him while maintaining a right of residence and will not be assessed on the right of residence privilege, but she will still have transferred the house, and as such if she needs nursing home care in the next five years, then the house will still be taken into account in the financial assessment and no 3 year cap will apply.
 
twofor1 said:
I have a family member in a nursing home for over 4 years now, the part of their contribution based on their valuable home ceased after year 3, had this not ceased their care would now be unaffordable, thankfully though their contribution is now based on their income only, so there is no financial burden on them or us and this will remain the case indefinitely.
Click to expand...

I just spoke to the HSE and they have confirmed that the 3 year cap would still apply as long as its still her primary residence.

Also the value would be locked at the transferred value.
 
twofor1 said:
The legislation states ‘’ any income or asset which is transferred within 5 years of applying for the scheme is taken into account in the financial assessment’’

Therefore I think theroux’s mother can transfer the house to him while maintaining a right of residence and will not be assessed on the right of residence privilege, but she will still have transferred the house, and as such if she needs nursing home care in the next five years, then the house will still be taken into account in the financial assessment and no 3 year cap will apply.
Click to expand...

Interesting! Are you saying that a transferred house, having been transferred within 5 years and therfefore assessable, will not be regarded as a PPR and so the 3 year cap would not apply? Seems harsh.
 
Slim said:
Interesting! Are you saying that a transferred house, having been transferred within 5 years and therfefore assessable, will not be regarded as a PPR and so the 3 year cap would not apply? Seems harsh.
Click to expand...

this is confirmed as not being the case
 
You must log in or register to reply here.
Back
Top