Fair deal scheme questions

S

Sunnysoutheast

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Father is 85. His house is worth approx €360k, he has savings of €250k.
Nursing home is €1k a week.

Are his savings subject to the 3 year cap?

If you don't take out the nursing home loan do you need to pay 7.5% of the value of his home in cash to the HSE each year for the first 3 years? [he technically owns 2/3 of the house and his children 1/6 each, so I presume it's 7.5% of the value of 2/3 of the house that he owns]

Is it financially better to get the nursing home loan?

Any other advice or ways to make this process financially efficient?!

Thanks so much.
 
Are his savings subject to the 3 year cap?
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No: savings are included until they run down to €36k (this figure may be updated since I last checked).

If you don't take out the nursing home loan do you need to pay 7.5% of the value of his home in cash to the HSE each year for the first 3 years?
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If you don't take out the loan, there's nothing to repay

Is it financially better to get the nursing home loan?
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You'll need to crunch the numbers.

Any other advice or ways to make this process financially efficient?!
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Assuming you are a higher rate tax payer, pay the nursing home fees yourself and claim the tax back
 
Thanks for your reply Thirsty!

How would I go about crunching the numbers to see if it's financially better to go with the nursing home loan? Is the only advantage of the loan that you postpone repayment of the nursing home loan until the relative dies? Are there any other advantages to getting the nursing home loan part of the Fair Deal?
 
Sunnysoutheast said:
How would I go about crunching the numbers to see if it's financially better to go with the nursing home loan?
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This calculator allows you to plug all the relevant figures for income, expenses and assets so it should give you a good understanding of what the best approach is.

Calculator March 2021 – fair deal

Delete Calculator Delete Calculator Delete Calculator..
myfairdeal.ie

Sunnysoutheast said:
Is the only advantage of the loan that you postpone repayment of the nursing home loan until the relative dies
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Pretty much, yes. It is designed for those who are asset rich and cash poor. Your father has the cash assets to pay both so you don't need to rely on the loan aspect to defer that payment.

Thirsty said:
Assuming you are a higher rate tax payer, pay the nursing home fees yourself and claim the tax back
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In some cases this makes sense where you will inherit the entire estate (eg. only child). The OP is one of 6 siblings so should absolutely not pay for the cost of care. It is not allowable to claim the tax relief and use the Dad's savings to pay for the cost of care.

The cost must be borne by the OP to genuinely claim the tax relief. If no provision for this cost is written into a will, then the OP will lose out long term.
 
use the Dad's savings to pay for the cost of care
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Indeed, but Dad can give a gift to offspring and grand-offspring of 3k per person per year if they so wish. But it's better not to be claiming HSE subvention in this case.

Again, it's down to crunching the numbers.
 
Sunnysoutheast said:
Is it financially better to get the nursing home loan?
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Your Dad has the cash, there are good arguments for paying the amount assessed on the house rather than availing of the loan, it is worth being aware of the following;

If he is paying himself, his savings will drop a lot quicker in the first 3 years if he does not avail of the loan. You can request a financial reassessment every year on the reduced savings.

The loan is interest free, but the amount owed will be adjusted for each year to allow for inflation. With current very high inflation rates, a significant amount extra could be owed when the time comes to repay what is owed.

The Fair Deal application process is less complicated and a lot quicker if not going for the loan.
 
@twofor1
"If he is paying himself, his savings will drop a lot quicker in the first 3 years if he does not avail of the loan."

Why is this? Is it because you are paying upfront for his care whereas the nursing home scheme allows for deferred payment? I presume, in the end, the total nursing home costs remain the same whether you took out the nursing home loan or not? Thanks for your help.
 
Is his wife alive? Are you one of 2 children? Did you help him to buy the house because this "technically owned" bit has me a tad confused? He could give his children quite a large amount of his wealth, which might entitle him to the fair deal payment in full. Some will say he shouldn't do this, but is he not entitled to do it as hundreds of thousands of Irish people have done already?
 
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There is a 5yr look back on asset transfers. 50% of the house value is deductable for dependent spouse living in house by my understanding.
 
Sorry, just reading this now, the email alerts didn't come through for these responses. His wife died in 2017 without a will so he got 2/3 of the house and his two children 1/6 each at the time.
 
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