Fair Deal: Can Revenue sell my mother’s house when I’m in it to repay nursing home loan?

I’m wondering about Fair Deal. My mum passed away in a nursing home two months ago. She was on Fair Deal. I am living in the family home at the moment. Could I rent it to pay off the loan or how much time do I have to pay, as I don’t know yet what I owe them? I didn’t get in contact with them yet.

Can they sell it while I’m in it if I can’t pay?

Mr M.M.

As I keep saying, Fair Deal is generally a great system but the whole issue of sorting out any money due against the family home can cause an awful lot of worry to people who are not familiar with the scheme.

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Assuming your mother took out a nursing home loan to cover any contribution to her care from the value of her home, the Revenue will be in touch to say what is owed. They act for the HSE on this and the person they contact will be what is called the “relevant accountable person”. This will be the person whose name was put down as being responsible for the repayment of the loan when the Fair Deal application was originally made. It could very likely be you but it could be someone else.

If you’re worried, you can certainly contact them, but there should be no need to do so as it sounds from your letter that you are likely to be the person they contact in time.

The maximum they can seek is 22.5 per cent of the value of the home at the time she entered Fair Deal, assuming she was in care for three years (7.5 per cent per year). Added to that will be a sum to allow for inflation – as measured by the Central Statistics Office’s consumer price index – since the loan was taken out. If she was in the nursing home for a shorter time, the bill will be for a lower percentage of the property value.

You have a year from the time your mother died to pay the loan. If it is not paid by then, interest will start to accrue on the outstanding amount and that interest – currently charged at a rate of 0.0219 per cent per day – will be backdated to the date of your mother’s death.

If you do not currently have the money to pay off the loan or are not in a position to sell the house as it is your home, you can apply for a deferral of the loan repayment.

[ Can I sell Dad’s home before we get a decision on Fair Deal? ]

An application for deferral is open to a partner, a relative or what is called a “connected person” – someone who has lived in the property for three years before the original Fair Deal application was made, for whom the house is their only residence and who has no financial interest in any other property.

In relation to family, other that spouses or partners of course, those able to apply include children of the dead person who are under 21 or who have assets to their name of less than €36,000. It also includes any relative in receipt of a disability allowance or similar, a blind person’s pension or the non-contributory State pension.

If your income is less that the contributory State pension amount – currently €265.30 a week or €13,796 a year – you are also eligible.

If you were caring for your mother before she went into the nursing home and were in receipt of payment for that, such as the Carer’s Allowance, you would also be able to apply.

Any application will need to be made to your local nursing home loan support office. You can find details of offices around the State here. Assuming a deferral is granted, bear in mind that the sum owing will be adjusted for inflation along the way until it is eventually paid.

Can you rent the property? Of course, you can but that raises the same issue for you about where you live, and also involves registering the property with the Residential Tenancies Board, meeting your obligation to any tenant as a landlord and having to sort out tax on any income your receive in rent after allowable expenses.

You could stay in the house and rent out a room without worrying about tax but the maximum you can receive tax free under that arrangement is €14,000. A penny more and the whole amount is liable to income tax, PRSI and universal social charge. This relief does not apply to short-term holiday or Airbnb-style rental, only to longer-term stays generally of more than 28 days – student digs arrangements are permitted – and the tenant cannot be a partner or any child of yours.

The €14,000 is unlikely to meet your bill but you could enter an arrangement with Revenue to pay the sum owing over a few years from such income so it is worth considering as an option.

[ Will rising property value affect amount we must pay HSE for Fair Deal on family home? ]

Finally, to put your mind at rest, no one can sell your house out from under you just like that. If you don’t pay the bill, they simply start charging interest. If you don’t engage with them at all, they might ultimately take you to court to enforce an arrangement for repayment but, assuming the property is left to you in your mother’s will, only you – or, in extremis, a court – can make a decision to sell the property.

Of course, if there are more family members, it may be that the property will have to be sold anyway under probate before anyone receives their inheritance from your mother. Revenue has a charge against the property so it would have to be dealt with under probate unless you are the only successor and succeed in getting a formal deferral.

The same would apply if your mother died intestate and there are other family members.