Income after Mother’s death

[garbanzo]

My mother died in January, RIP. We had rented out the family home to cover the costs of her nursing home care. We availed of the Fair Deal and declared this additional income to the HSE at the time. I have prepared tax returns for her for 2016 and should be able to write off tax (but not prsi or USC unfortunately) owed against nursing home expenses up to her date of death.

Since her death the rental income has continued to be lodged to a joint account. I had set this up with her in both our names to manage her affairs. I am unclear what the tax treatment of this should be. Her Will leaves four equal shares of her estate to my sisters and other brother. The house is likely to be sold in due course.

• As I am the name on the joint account will I be fully liable for tax etc?
• Or, will the four of us be collectively liable ?
• If so, how do we go about calculating this. How do we allocate write offs such as landlord insurance, agent fees etc.

I’ve not been able to find anything clear online hence asking here.

Many thanks.

 

[Joe_90]

The estate ownes the house so the estate should pay income tax on the rental income until it is transferred to the beneficiaries.

You probably could file a return for a 1/4 share of the rental income in each name if you thought that would be easier.

 

[twofor1]

My mother died in January, RIP. We had rented out the family home to cover the costs of her nursing home care. We availed of the Fair Deal and declared this additional income to the HSE at the time.

Hi garbanzo,

Sorry for your loss, I can’t answer your questions re tax liability, hopefully others can, but could I please ask you a related question which would benefit others in similar circumstances to your own.

How does renting the family home cover nursing home costs ?

My understanding of Fair Deal is you pay 80% of all income including rental income towards the cost of your care. I also understood that reasonable expenses associated with renting were not allowed for Fair Deal purposes, unfair in my opinion, but that appears to be the way it is.

For arguments sake if you got €1000 a month in rental income you were assessed on that entire amount without any allowances, so €800 would go towards the cost of nursing home care, the €200 that’s left would more than likely be used up with letting expenses, such as wear & tear, agents, PRTB etc, also bear in mind that a vacant house is exempt from property tax if the owner is in full time nursing home care, if there are tenants, property tax still applies.

I know several, family members included who are in nursing homes under Fair Deal and have vacant homes for the above reasons, there would be no financial gain, it would probably even cost them. Add to that the hassle of another family member / friend having to take on the stressful role of landlord.

Also once assessed you are liable for that amount for the next year, you can’t apply to be reassessed for another year, one might have vacant periods between lettings, or the tenant who doesn’t pay, or refuses to leave ?

It seems to me that renting the family home, at best would be a lot of stressful work for a reluctant landlord, with numerous potential problems, there would be no financial gain, one would probably even be worse off, and potentially could be a lot worse off, why would anyone go there ?

What am I missing ?

Thanks.

 

[garbanzo]

Thanks for that Joe_90. That is helpful.

In answer to your question twofor1 I'm not sure you are missing anything. Financially it probably just about broke even as an arrangement. We were concerned at the house being left vacant and having to call over to check it, the possibility of being burgled, mow the lawn in the summer etc. etc. Letting it and handing it over to an agent rid us of all that hassle. All of us are working and we had a rota too for visiting her regularly.

Her Fair Deal claim was reassessed and it resulted in an increase in her charge but it worked out less than we'd anticipated.We expect to be able to write off the tax liability on the house rental against the nursing home charges paid. I'm no financial expert (as you'll have seen from my OP) but for all the reasons earlier it made sense to us to rent it out. Hope that explains our reasons and much appreciate your condolences.