Attempting to maximise tax refund for Nursing Home Fees.

[WaysnMeans]

Mother has just gone to a NH. We have applied for Fair Deal, but given her savings and house value it is probable that there will be no state aid, at least for 3 years. However, the FD cost is less than the private cost, so that is worth it.
Her will leaves her assets to be shared equally between her 4 children, and her savings could probably pay fees for 5 or 6 years.

Mother's income is low, so her capacity to get tax relief on the cost is negligible. I am a 40% tax payer and could afford to pay about 6 months of fees, at least for this year. I understand that Mother cannot recompense me for that cost because Revenue would treat that as her paying the fees. However, I am willing to wait until after she dies and the will is settled if my siblings agree now to each give me a quarter of what I paid after the tax refund.

One of my brothers believes that revenue would see that as a tax dodge so he is not willing to support the scheme.
Is he right? I would welcome informed views on this.

I realise that I there might be nothing in the estate if Mother survives a long time, and that there could be bad blood if an agreement to contribute to the cost was not honoured, no need to warn me of all those issues.

 

[Brendan Burgess]

One of my brothers believes that revenue would see that as a tax dodge so he is not willing to support the scheme.
Is he right? I would welcome informed views on this.

Yes, he is right.

Brendan

 

[suzie]

If between your siblings have the cash flow and (including their partners) you can do a drip feed merry go round from your mother cashflow through to you which you pay and claim the 40%. The annual gift limit is 3k

 

[cremeegg]

I am a 40% tax payer and could afford to pay about 6 months of fees, at least for this year. I understand that Mother cannot recompense me for that cost because Revenue would treat that as her paying the fees. However, I am willing to wait until after she dies and the will is settled if my siblings agree now to each give me a quarter of what I paid after the tax refund.

One of my brothers believes that revenue would see that as a tax dodge so he is not willing to support the scheme.
Is he right?

Yes, he is right.

Brendan

Brendan, I dont think any other poster would get away with a bald statement like that without any explanation or support for the opinion.


In many cases such as the OPs the children pay the NH fees and get tax relief. That is in my reasonably wide experience of the matter, a common course of action. That obviously minimises the after tax cost of the fees to the family.

I have not seen a case where just one family member carries the fees at the time and expects to be reimbursed at a later date by the siblings.

 

[Gordon Gekko]

I’ve seen this done and in my view it’s fine:

- Say the fees are €60k a year
- One sibling lends his brother and sister €20k each to fund their share
- They partially repay him when they get their tax relief
- They fully repay him when they get their share of the estate

Given that the amounts involved are sizeable, why not get some professional advice?

 

[Brendan Burgess]

One of my brothers believes that revenue would see that as a tax dodge so he is not willing to support the scheme.
Is he right? I would welcome informed views on this.

Yes, he is right.

Brendan, I dont think any other poster would get away with a bald statement like that without any explanation or support for the opinion.

cremeegg - did you misread my post?

You quoted the entire post. I quoted the bit about the tax dodge. I really don't know what you mean by any other poster?

The brother has said that this is a tax dodge.

The OP asked if it is a tax dodge.

And it's clearly a tax dodge. So I agreed with the brother.

I would be shocked if the Revenue would turn a blind eye to this. They would see it as tax evasion. If your experience is that the Revenue does turn a blind eye to it, then fine.

There is no tax dodge in paying nursing home fees on behalf of someone else. Nor have I suggested this.

Brendan

 

[Brendan Burgess]

- Say the fees are €60k a year
- One sibling lends his brother and sister €20k each to fund their share
- They partially repay him when they get their tax relief
- They fully repay him when they get their share of the estate

That is perfectly fine.

But in the original case, the OP cannot agree now to his siblings refunding him from the mother's estate.

Brendan

 

[cremeegg]

Brendan,

I quoted the part of the OPs post which outlines the proposal which you have described as a tax dodge.

There is not much point in saying "yes he is right" without being clear what "he" is saying.


Further

I would be shocked if the Revenue would turn a blind eye to this. They would see it as tax evasion. If your experience is that the Revenue does turn a blind eye to it, then fine.

I clearly outlined what I have seen done, and what I have not seen.

I have not seen a case where just one family member carries the fees at the time and expects to be reimbursed at a later date by the siblings.

Please don't suggest, or even nearly suggest, that I am advocating tax evasion.

 

[WaysnMeans]

- Say the fees are €60k a year
- One sibling lends his brother and sister €20k each to fund their share
- They partially repay him when they get their tax relief
- They fully repay him when they get their share of the estate

I had not considered that scenario, it looks like it is worth thinking about. Thanks for feedback folks.

 

[Brendan Burgess]

I quoted the part of the OPs post which outlines the proposal which you have described as a tax dodge.

Please look at post no 2.

His brother considers this a tax dodge. I agree with the brother.

Gordon seems to have a solution which is not a tax dodge.

Brendan

 

[Brendan Burgess]

Hi cremeegg

Look back at Post no 1 as well. I don't think you have read it fully.

Claiming tax relief on nursing home fees is not a tax dodge.

Getting the net amount from the mother is tax evasion - I know that you are not suggesting that.

Agreeing now to getting the net amount from the siblings' share of their inheritance would be tax evasion.

You don't support tax evasion.

But I think that your first reply might well give the impression that you support a scheme. But that is because I think you have misread it?

Brendan