Fair Deal/Nursing Homes Calculating house contribution at 7.5%

[legal33]

Hi,

For a single person entering a nursing home, is this the correct calculation for their house, assuming house value increases by say 10K per annum?

Year 1 400K * 7.5 % = 30K

Year 2 (410K - 30K ) * 7.5% = 28.5K

Year 3 (420K - 30K - 28.5K ) * 7.5% = 27.1K

Year 4 NIL

Total contribution = 85.6K


Thanks

 

[Thirsty]

Unless things have changed, the property is not revalued every year.

The 7.5% is based on the property valuation at the time of entry to the scheme.

Having said that, if the property is valued at 100k and three years later sells for 500k, you can expect to be investigated.

 

[legal33]

Thank you,

So the calculation is:

Year 1 400K * 7.5 % = 30K

Year 2 (400K - 30K ) * 7.5% = 20.25K

Year 3 (400K - 30K - 20.25K ) * 7.5% = 26.23K

Year 4 NIL

Total contribution = 76.48K

 

[legal33]

So for property valuation with respect to land for which there is no 3 year cap, I assume that after 5 or 10 years the land would be revalued and the 7.5% based on the latest valuation?

 

[_OkGo_]

Thank you,

So the calculation is:

Year 1 400K * 7.5 % = 30K

Year 2 (400K - 30K ) * 7.5% = 20.25K

Year 3 (400K - 30K - 20.25K ) * 7.5% = 26.23K

Year 4 NIL

Total contribution = 76.48K

Both of your calculations are incorrect. You do not subtract year 1 contribution from the value for calulating year 2 or year 3.

In your example, year 1, 2 and 3 will all be 30k or a total of 90k.

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[Thirsty]

Thank you,

So the calculation is:

Year 1 400K * 7.5 % = 30K

Year 2 (400K - 30K ) * 7.5% = 20.25K

Year 3 (400K - 30K - 20.25K ) * 7.5% = 26.23K

Year 4 NIL

Total contribution = 76.48K

It's much more straightforward.

Property valuation = €100k @ 7.5% per year.

If resident in nursing home for 3 or more years, max repayment is 7.5 * 3 = 22.5%

100k * 22.5% = €22, 500

If two years repayment is

100k * 15% = €15,000