My uncle has resided in a care home for over three years, and is thus eligible for the three-year cap. It is our understanding that repayment of the care home loan can be made via the Revenue within half a year following the sale of his property. This arrangement seems appropriate in view of the current housing climate and associated anxieties about leaving a property unoccupied.
I would appreciate advice on the necessary procedures and any subsequent actions concerning the selling of the property, the relevant tax implications, and the Revenue documentation obligations. For instance, what tax preparations must my uncle undertake in order to sell his property? Will Revenue permit a family member to complete online income tax returns on his behalf if necessary? Additionally, will Revenue communicate with a family member of the property seller? (My uncle previously informed his solicitor of his intention to sell his property, but he’s unable to complete the requisite paperwork and liaise with Revenue over the telephone. If required, we can provide Power of Attorney to Revenue as well)
We would value any direction on how to navigate this procedure efficiently.
Best regards,
Ms C.M.
While managing familial affairs can be challenging, proactive planning can ease the process. It appears that you’ve already taken an important step in considering an enduring power of attorney, as mentioned in the last line of your letter. This arrangement allows either you or another relative or friend to make decisions on behalf of your uncle in situations where he is no longer physically or cognitively capable of managing his own affairs.
Given your uncle’s situation, the relevance of implementing such an arrangement becomes evident. Aside from the property matter, he may require an attorney acting under an enduring power to assist with his dealings with the care home and the Fair Deal scheme supporting the cost of his care.
Without advanced arrangements, a person incapable of independent decision-making may find their assets in limbo until a representative is assigned – someone to either assist them in making decisions, or to make decisions on their behalf.
Previously, such matters were governed by the wards of court system, but have been superseded by the Decision Support Service as per the Assisted Decision-Making (Capacity) Act of 2015. For more information, visit their website at https://decisionsupportservice.ie/services, where you’ll find the prospective choices open to your uncle and those aiding him, accounting for his capacity to be involved in the process.
In your particular situation, having an established lasting power of attorney implies that the designated attorney(s) can execute duties on behalf of your uncle. When I mention “you”, it specifically refers to the said attorney(s).
Throughout your journey, every individual you encounter – property agents, solicitors, Tax Authority, and others – will demand an attested copy of the lasting power of attorney, making it useful to have multiple certified versions from the initial drafting solicitors. Furthermore, various utility providers including gas, electricity, phone, waste, and alarm, need to be informed timely and, of course, his bank as well. All these bodies will demand to review an authenticated copy of the power of attorney.
Once this document is provided, the Tax Authority, amongst others, will feel comfortable speaking directly with the registered attorney(s) on behalf of your uncle and allow them to complete any necessary paperwork for his account.
Under the newly introduced Decision Support Service conditions, which also encapsulates lasting powers of attorney created from April of the preceding year, a publicly available database exists to confirm coverage under a lasting power of attorney. However, I’m presuming that your uncle’s agreement was arranged prior to that.
Subsequently, the selling process can carry on like any typical house sale.
In the process, you will encounter numerous small tasks needing administration, such as making sure that local property tax (LPT) payments for the property are up-to-date, and getting clearance from the Tax Authority confirming the payments are in good order. Primarily, if the property’s sale price is significantly higher than its assessed LPT band, you may be presented with an extra charge to settle before the Tax Authority permits the finalisation of the sale.
Upon completion, a six-month window is allocated to settle your uncle’s care home loan – the cost levied against his house’s worth at a rate of 7.5% annually over his initial three years in prolonged care. This is collected by the Tax Authority for the Health Service Executive. The duration expands to a year if he had passed away before the house was sold.
In light of your uncle’s situation, it’s necessary to annually file a tax return documenting the capital gain from the property sale. However, you can also claim the Principal Private Residence Relief (family home relief), suggesting that there will be no tax liabilities on the sales transaction. This is provided the property was never leased during your uncle’s life. If it was, a slight capital gain taxation may be due, but your letter indicates this may not apply here.
Historically, once a property is sold, the obtained assets were subjected to the Fair Deal in the same manner as all others with a compulsory yearly contribution. However, this was modified several years ago; a three-year cap on assessments applies now, regardless of when the property sale took place, reassuring you of no concerns in this regard.
Subsequently, it falls on the lawyers to invest the profits from the property sale for your uncle’s advantage. This process, naturally, would involve some time and likely require the assistance of professional financial consultants, unless the lawyers possess significant expertise in the sector. Consideration should be given to your uncle’s short and medium-term needs and desires wherever feasible.
Despite everything, I recognise that the new system may present complications. There have been significant delays in the scheme, which is certainly worrying given the urgent nature of matters and the time constraints faced by individuals who might be losing their decision-making ability. Doubts about the process also persist.
You did express worries about the property being idle amidst a housing crisis. Thus, it’s crucial to know that your uncle, or his legal representatives, can opt to rent the house rather than sell it. As of February of this year, income derived from rent will not count toward the assessment of means for your uncle’s financial participation under Fair Deal.
It stands to reason that, like any other landlord, he would be subject to income tax on the rental income. Registering the property with the Residential Tenancies Board and potentially upgrading the property to suit their requirements could also be necessary, which potentially could pose more hassle than it’s worth.
However, this option is worth contemplating, as the lawyers hold a financial and other fiduciary responsibility to your uncle.
For any questions you may have, kindly direct them to Dominic Coyle at the Q&A section, located at 24-28 Tara Street, Dublin 2. You can also get in touch via email at [email protected]. Please make sure to include your contact telephone number. Please note, this section is dedicated to assisting readers and should not be considered a substitution for professional consultation.