Does it make financial sense to sell or rent your home if you are in the Fair Deal Scheme?

[Brendan Burgess]

Let's deal with selling your house first.

If you have a house worth €300k, the amount of state support you receive will be reduced by 7.5% or €22,500 each year for the first three years. If you have €300k cash, the amount of state support will be reduced by €22,500 as well, so there is no difference in the first three years.

However, after three years your family home is ignored in the financial assessment, but your cash assets are not.

So if you expect to be in the nursing home for more than three years, you should not sell your family home.

If you do sell it, you will have to continue paying €22,500 towards your nursing home fees. If you don't sell it, you will not have to pay anything.

 

[Brendan Burgess]

Is it financially worthwhile to rent out your house while in nursing home?

If you are getting state support (as distinct from the nursing home loan scheme), then the amount of state support you get will be reduced by 80% of your income.

Let's look at an example for someone who has been in a nursing home three years already, so his home is ignored in the financial assessment.

He only benefits by €2,000 through renting his house.


Charlie Year 1 - 3

The net benefit is €4,500 - Rent of €10,000 less the €5,500 state support lost

 

[Brendan Burgess]

Should Deirdre rent out her house?

After Year 3

From Deirdre's point of view:

She is better off by €9,500 if she rents out her house.

In Year 1-3, because she gets no state support, she is better off by the full rent if she rents out her house.

And because she can claim the full nursing home fees for tax purposes, her rental income is effectively tax-free.

So she has every financial incentive to rent out her house.