My uncle has been in a nursing home for more than three years and qualifies for the three-year cap. We understand the nursing home loan can be repaid through Revenue within six months of the sale of his home. This makes sense given the housing crisis and concern about leaving a house vacant.
I would welcome guidance on the process and next steps regarding house sale, the tax implications, the Revenue paperwork requirements, for example:
What tax affairs does my uncle need to have in place to sell his house? Does Revenue accept a relative filling out online income tax returns on his behalf if needed? And will Revenue speak to a relative of the house seller? (My uncle had previously confirmed with his solicitor that he was happy to sell his house but he is not in a position to fill out the paperwork and talk to Revenue on the phone. The power of attorney can also be sent to Revenue if needed.)
Please advise on how to navigate the process efficiently.
Ms C.M.
Dealing with affairs on behalf of family members can be fraught with difficulty but forward planning can make things a lot easier.
In this case, you mention probably the most significant element in the final line of your letter – the power of attorney. Now there are different forms of power of attorney but I am assuming you are talking in terms of an enduring power of attorney that allows you or some other family member or friend to make decisions on behalf of your uncle – or help him to do so – when he is no longer physically or mentally in a position to do so for himself.
And the circumstances you outline show why it really is so important that people consider putting such an arrangement in place. Never mind the house, he may well need an attorney acting under the enduring power to help him in his affairs with the nursing home and the Fair Deal scheme that helps subsidise the cost of that care.
Put simply, if no advance arrangements are made, a person unable to make decisions on their own behalf can find their assets frozen until someone is appointed to help them make decisions or make decisions for them.
This used to be done through the old wards of court system but that has been replaced by the Decision Support Service under the Assisted Decision-Making (Capacity) Act 2015. You can find its website at https://decisionsupportservice.ie/services outlining the options available to your uncle or those helping him with decisions depending on his ability to be involved in the process.
However, in your case, with an enduring power of attorney in place, whoever has been appointed as attorney(s) can act for your uncle. When I say “you” here, I am referring to those attorney(s).
Pretty much everyone you meet in the process – estate agents, lawyers, Revenue, etc – will require a certified copy of the enduring power of attorney, so it is worthwhile getting a good number of them certified by the lawyers who initially drew them up. There will also be myriad utilities – gas, electricity, phone, waste, alarm – who need to be kept in the loop and, of course, his bank. All will need sight of a certified copy of the power of attorney.
Once they have that documentation, Revenue (and others) will be happy to speak to whomever is the registered attorney(s) for your uncle and have them fill out any forms required on his account.
Under the new Decision Support Service arrangements – which also cover enduring powers of attorney made since April of last year – there is a searchable register available to confirm who is covered by an enduring power of attorney but I am assuming your uncle’s agreement was drawn up before that.
After that, the sale process can proceed as any house sale would.
You will find there are lots of small items that require administration – such as getting clearance that the property is up to date with local property tax (LPT) payments, and, in addition, Revenue clearance that those LPT payments are in order. Essentially, if the property is selling for substantially more than the LPT band it has been assessed under, you may have an additional bill to pay before Revenue will sanction closing of the sale.
Once complete, you have, as you note, six months to pay off your uncle’s nursing home loan – the money he was charged against the value of his home at 7.5 per cent of its value per year over his first three years in long-term care. Revenue collects this on behalf of the HSE. If he had died before the house was sold, that period is extended to a year.
You will have a file an annual tax return on behalf of your uncle noting the capital gain on the sale of the property but also claiming the principal private residence relief (family home relief) which means he will have no tax to pay on the transaction – presuming the property was not rented out at all during his lifetime. If it was, he will have some capital gains tax liability though I assume from your letter it is not the case here.
In the old days, you may have heard that, once the property was sold, the assets were treated for Fair Deal the same way as all other assets and an annual contribution required from them. That was amended a few years ago and the three year cap on assessment is now the rule, regardless of when the property was sold so you have no worries on that account.
At that point, the attorneys have a responsibility to invest the proceeds of the property sale for the benefit of your uncle and that, in itself, will take time and probably the help of professional financial advisers unless they are particularly well informed in that area themselves. Account needs to be taken of your uncles probable short- and medium-term requirements and wishes where possible.
Having said all that, I am aware that there are issues with the new regime. There are considerable delays in the scheme, which is obviously concerning given the sensitive nature of the issues involved and the pressure of time in many cases for people who may be losing the power to confirm they are making decisions for themselves. There are also ongoing concerns about the process itself.
Of course, given your concern about the property lying vacant in the middle of a housing crisis, you should be aware that your uncle or his attorneys can now rent out the property rather than sell it. And from February of this year, any rent income accrued will not be taken into account in any assessment of means for your uncle’s financial contribution under Fair Deal.
He will, of course, be liable to income tax on that rental income in the same way as any other landlord. And renting the property will require registration with the Residential Tenancies Board and the possibility of upgrade work to meet its requirements so it may prove more trouble than it is worth.
Still, it is worth considering not least as the attorneys have a duty of care (financially and otherwise) towards the person for whom they act.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dominic.coyle@irishtimes.com with a contact phone number. This column is a reader service and is not intended to replace professional advice
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