Fair Deal/Nursing Homes Nursing home tax relief

A

ardman

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Hi,
If Fair Deal is not suitable financially, I understand the best route to go is pay privately and claim tax relief at 40%. My elderly mother doesn't pay tax @ 40%.
How would you organize a member of the family who pays tax @ 40% to take on this responsibility without causing strain on their finances - would they have to pay out large amounts to nursing home before they can claim it back? Could my mother's pension be paid to them? Would that constitute extra income or would it be regarded as a gift? Any advice very welcome.
Thanks
Ardman
 
Depending on the nursing home, you are looking at somewhere between €50k and €75k pa for nursing home. They tend to bill weekly or monthly depending on the home.

Pension can only be paid to the pension holder if you are not going through Fair Deal. What happens it after that is between you and your mother. One option to consider would be for her to pay for part of the care directly once her pension is paid and whoever else is paying the rest does so. That would impact on the tax relief but could be cleaner overall from a tax perspective.

Not sure what you mean by Fair deal not being "suitable financially, perhaps you could clarify?
 
Thanks.
Re Fair Deal not being suitable: there are 2 properties in my mothers name, her home and a holiday home. She also has part of my late fathers pension +old age pension. Assuming that properties valued@ 200K each, those along with 80% of income would make it not worth her while to go this route. I realise her home is only taken into the calculations for 3 years at 7.5%.
Sorry but I meant pension would still be paid to my mother but she then hands it over to the 40% taxpayer. Would that then be seen as extra income for or a gift to the 40% taxpayer. if regarded as a gift,would it affect their inheritance threshold over a number of years?
 
Depending on the number of siblings I would suggest to best treat as a gift and yes it would affect the inheritance threshold.
You and siblings would be getting the 40% tax rebate.
it depends if you believe the value of the 2 homes would greatly exceed the thresholds for all family members and if shared equally or otherwise per the will.
 
There are 7 of us and an uneducated guess would put each property at around €200k so your suggestion could certainly be a solution.
Thanks for suggestions
 
ardman said:
Sorry but I meant pension would still be paid to my mother but she then hands it over to the 40% taxpayer.
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Claiming tax relief based on such an arrangement would likely be classed either as artificial tax avoidance or outright tax evasion.

Either way, I cannot imagine the Revenue Commissioners having any truck with it if the arrangement was to come to their attention.
 
I acknowledge that it can be regarded as avoiding tax but I think everybody wants to avoid paying tax if it's legal. If it's regarded as tax evasion then that's illegal and not an option. We are looking at the options to reduce the cost of care
 
ardman said:
I acknowledge that it can be regarded as avoiding tax but I think everybody wants to avoid paying tax if it's legal. If it's regarded as tax evasion then that's illegal and not an option. We are looking at the options to reduce the cost of care
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Neither artificial tax avoidance nor tax evasion are legal.

Each is punished severely whenever a case is discovered by the Revenue Commissioners.
 
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