Transfer of property under fair deal scheme

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ReadySteady

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I believe this topic will apply to many families across the country, but there's not enough information / examples to understand the available options. Consider this situation, for which I am trying to gather as much advice as possible for a close friend of mine.

You have an 86-year-old in a nursing home for the past year, availing of the fair deal / nursing home loan. Her five-bedroom house is sitting empty, as it cannot be rented out (otherwise 80% of income will go to fair deal, aka not worthwhile to put it into rentable condition). It's becoming damp, mouldy and in need of repairs. I understand this is a widespread picture of thousands of homes under the fair deal scheme. Her son and daughter are both renting separately, but are both severely struggling with finances, having lost work over covid.

Worst case scenario, they can both move into the house with the mothers permission, and agree to take care of the house upkeep and bills. This sounds fine in theory - however, the problem is that there is a massive personality clash between the siblings (first world problems, I know!)

Best case scenario, the house is big enough to convert into two separate units. Planning permission aside, what is the most viable way to do this under fair deal?

The mother would be happy to transfer (gift) the house to her children. The children could then take a loan to convert the house into two units. As I understand, upon transfer of the house to the children, the nursing home loan will have to be repaid at 7.5% the value for three years. Are there any other caveats here? Is it OK to transfer the house before the three years, or is there any other clause?

A second possibility would be for the Mother to retain ownership, and the children to go ahead and convert the property - would this be against fair deal conditions?

Deeply concerning that there are so many vacant houses in the country in this exact same situation, amid our housing crisis.
 
The HSE must be advised of any change in circumstances. Two children who were not living there when the Fair Deal application was made, converting the family home into 2 units and moving in would be a notifiable change. I would think the HSE would say it is then more valuable and would reasonably expect there to be rental income, both would be taken into account in a financial reassessment.

The house can be transferred or sold at any stage, whatever is owed must then be paid. More importantly the 3 year cap will no longer apply and the house sale proceeds (Or value if no payment made) will become assessable as long as the mother is in care, no longer just for 3 years.

From what you posted, the best option might be for both to move in as caretakers, do nothing but pay the bills and maintain etc, there should be plenty of space in a 5 bed to keep away from each other.

If they can’t do that, they should stay in their rented accommodation. Transferring the house and or dividing it into 2 units does not seem to be an option for many other reasons, not just the above.
 
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Am I correct in thinking that any assets a person has when applying for Fair Deal funding need to have been transferred 5 years or more, otherwise they become part of the assets of the applicant and will be used to pay or part pay the nursing home costs? By getting a person into the Fair Deal scheme with the taxpayer mostly paying for it, then rearranging the assets to a family's advantage will hardly go unnoticed by the HSE. I doubt very much what you're proposing will be allowed without an in depth look by the Fair Deal Financial Dept. I certainly wouldn't go ahead without talking to them. That's not to say that this is not being done and I wonder what would be the repercussions if HSE found out.
 
noproblem said:
Am I correct in thinking that any assets a person has when applying for Fair Deal funding need to have been transferred 5 years or more, otherwise they become part of the assets of the applicant and will be used to pay or part pay the nursing home costs? By getting a person into the Fair Deal scheme with the taxpayer mostly paying for it, then rearranging the assets to a family's advantage will hardly go unnoticed by the HSE. I doubt very much what you're proposing will be allowed without an in depth look by the Fair Deal Financial Dept. I certainly wouldn't go ahead without talking to them. That's not to say that this is not being done and I wonder what would be the repercussions if HSE found out.
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Thanks for your comment, you are correct in your thinking - but you have picked me up wrong in my initial thread. I mentioned that full payment of the nursing home loan would be repaid upon transfer of the home. 7.5% of the value X three years. This is the total nursing home loan that would be collected in any circumstance.
The family will discuss with fair deal office, just wanted to gather suggestions to begin with. :)
 
twofor1 said:
The HSE must be advised of any change in circumstances. Two children who were not living there when the Fair Deal application was made, converting the family home into 2 units and moving in would be a notifiable change. I would think the HSE would say it is then more valuable and would reasonably expect there to be rental income, both would be taken into account in a financial reassessment.

The house can be transferred or sold at any stage, whatever is owed must then be paid. More importantly the 3 year cap will no longer apply and the house sale proceeds (Or value if no payment made) will become assessable as long as the mother is in care, no longer just for 3 years.

From what you posted, the best option might be for both to move in as caretakers, do nothing but pay the bills and maintain etc, there should be plenty of space in a 5 bed to keep away from each other.

If they can’t do that, they should stay in their rented accommodation. Transferring the house and or dividing it into 2 units does not seem to be an option for many other reasons, not just the above.
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Thanks for the advice! The family will get in contact with the fair deal office to discuss options, just trying to gather facts or if anyone had experience.

The nursing home loan would be paid in full upon transfer of the house - 7.5% value X three years. Wouldn't that be the end of the nursing home loan side of things, and the mother will continue paying 80% of her income indefinitely ?

Thanks again.
 
ReadySteady said:
The nursing home loan would be paid in full upon transfer of the house - 7.5% value X three years. Wouldn't that be the end of the nursing home loan side of things, and the mother will continue paying 80% of her income indefinitely ?
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No, the 7.5% for 3 years only applies while the mother owns the house. If sold or transferred the 3 year cap no longer applies.

If the mother had been in the nursing home for a year when the house was transferred, then 7.5% would be owed and have to be paid. She would then be assessed on the house value @ 7.5% as well as 80% of her income for every year thereafter, not just year 2 and 3.

You don’t say how much the home is worth, as an example if the 5 bed house was only valued at €200,000.
If transferred after the mother being in the nursing home for 1 year, then €15,000 would have to be paid for the loan.
Every year thereafter (not just year 2 & 3) the mother would have to pay 80% of her income plus €15,000.

You say the son and daughter are both severely struggling financially, and the house is to be transferred;

Where is the €15,000 going to come from to pay the initial loan ?

Where is the annual €15,000 going to come from to pay the amount assessed on the house value that will be due in addition to 80% of income for every year thereafter ?
 
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Hi

On this subject and another thread in relation to the 3 year home exemption rule, can someone please explain if the house is put up for sale, say 18 months after the Person goes into care, how is the liability to the HSE calculated?

Bedlam
 
Bedlam said:
Hi

On this subject and another thread in relation to the 3 year home exemption rule, can someone please explain if the house is put up for sale, say 18 months after the Person goes into care, how is the liability to the HSE calculated?

Bedlam
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The rules are that 7.5% of the assets are payable every year, with an exception for the family home, that is charged at 7.5% for 3 years only.

If the family home is sold at any point while the owner is in the Fair Deal scheme the Family Home exemption no longer applies, and 7.5 % is charged on all assets every year.

For example house assessed at €200k (after the allowances) so 7.5% ie €15k due each year for 3 years.

If the house is sold at any point while the person is still in the nursing home, wether that is year 2 or year 5, then €15k becomes PAYABLE EACH year there after. Because the person now has cash assets which are not exempt under the 3 year rule, and which cannot use the loan scheme, ie the money has to be paid each year.

In effect a house in the Fair Deal scheme cannot be sold, without serious implications.

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It's a bonkers system where it's better to leave a property empty and mouldering for years than sell it.
 
There maybe tax considerations also...

Gift tax implications of allowing my son stay rent-free in an investment property I own

This is covered in today's Irish Times. https://www.irishtimes.com/business/personal-finance/how-does-revenue-view-adults-living-rent-free-in-parents-property-1.4543367 The [broken link removed] tightened the rules and now the only support parents are allowed offer adult children tax-free is...
www.askaboutmoney.com
 
cremeegg said:
The rules are that 7.5% of the assets are payable every year, with an exception for the family home, that is charged at 7.5% for 3 years only.

If the family home is sold at any point while the owner is in the Fair Deal scheme the Family Home exemption no longer applies, and 7.5 % is charged on all assets every year.

For example house assessed at €200k (after the allowances) so 7.5% ie €15k due each year for 3 years.

If the house is sold at any point while the person is still in the nursing home, wether that is year 2 or year 5, then €15k becomes PAYABLE EACH year there after. Because the person now has cash assets which are not exempt under the 3 year rule, and which cannot use the loan scheme, ie the money has to be paid each year.

In effect a house in the Fair Deal scheme cannot be sold, without serious implications.

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Thanks for the replies to expand my side both parents in nursing home. Existing life loan 225k outstanding property value 300k. Under the fair deal if the property was sold and loan paid off would the fair deal reassess their means and increase subsidy? Would it make sense to go this route?
 
The limits of the faird eal only apply when its your family home.
Once you turn it into cash its no longer protected from the 3yr fairdeal limit.
But they don't touch the last €72,000 of a couples cash assets. TBH you'd have to check with them.

The fair deal, obviously locks in the family home. But it makes no provision for maintaining it.
It needs to be lived in to maintained and it actively prevents that.
 
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