I have a query about selling my mother’s home. She has been in a nursing home for five years. Two of my children have lived in her house in that time, taking the opportunity to save a deposit for their own houses. The eldest bought her own house last year, and the younger one has just gone sale-agreed on her house.
This means that my mother’s house will be empty but we would prefer to see someone living in it. Reading a previous Property Clinic on renting out a parent’s former home, which detailed the significant responsibilities of becoming a landlord, discouraged me from the rental option.
If we sell the house on behalf of my mother and then put the proceeds into her bank account, will she be liable for capital gains tax? Also, would it have an impact on her Fair Deal payments for her nursing home?
We have considered the Capital Gains Tax (CGT) position in the context of this query. CGT is a tax you pay on any profit made when you dispose of an asset.
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There is a relief from CGT on the sale of a person’s principal private residence (PPR), which broadly applies to a house (and garden up to one acre) that was owned and occupied as a person’s only, or main, residence through the period of ownership. PPR relief can be restricted in certain circumstances, for example, where the house was partially used as a business or if the sale comprises development value.
There is an apportionment of the relief if the house was not always occupied as a PPR. In this context, there is a period of grace whereby the last 12 months of ownership can be considered as a period of qualifying occupation even though not lived in, while the property is being sold.
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For the purpose of the relief, Revenue will also allow certain periods of non-occupation to qualify for the relief as deemed occupation. One of these deemed occupation periods includes the situation where the owner was either:
- receiving care in a hospital, nursing home or convalescent home or
- resident in a retirement home on a fee-paying basis
The Revenue Commissioners state in their guidance that where the house was occupied rent-free, during a period of absence by a relative of the claimant, for the purpose of security or maintaining it in a habitable condition, the relief can still apply.
Fair Deal implications
Published guidance on the Fair Deal scheme sets out that an individual’s home will be removed from their financial assessment after they have been in care for three years. It also sets out that if the home is sold while in care, the net proceeds of the sale will also qualify for the three-year cap. However, we would advise you contact your local nursing homes support scheme office to confirm the position prior to the sale as this is a very specialised area.
Suzanne O’Neill is a tax partner at RSM Ireland
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