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Fair Deal Scheme Tax Relief on Nursing Home Fees and
 for Dependent Relatives

See Related Links :
Δ  Nursing Home Care Support scheme
Δ  Nursing Home Care Support scheme : Frequently asked Questions
Δ  Download med1form

Tax Relief on Nursing Home Fees and for Dependent Relatives

Δ Tax relief for Nursing Home Care 

An individual may claim tax relief in respect of the costs (less any amount paid by a public or local authority, insurance scheme or other compensation) of maintaining a relative in a nursing home
which has been approved by the Minister for Health and Children.

The first 125 per person does not qualify for relief. Where several dependents are the subject of a claim, the overall restriction is 250 for a group.
The tax relief is available at the taxpayer's highest rate of tax and can be claimed by completing form Med 1.

An individual may claim tax relief in respect of costs incurred relating to a relative or any other person who is either over 65 or permanently incapacitated by reason of mental or physical infirmity.

The definition of 'relative' for Health Expenses is very wide and includes a spouse, ancestor, lineal descendant, brother & sister, brother-in-law & sister-in-law, parents-in-law or any other child (not being a child of the claimant) in the claimant's custody who is maintained by the claimant.

In cases of hardship, PAYE taxpayers may be given the relief through the PAYE system on a weekly or fortnightly basis, to help meet the cost, rather than waiting until the end of the tax year.

If part of the costs of the nursing home are shared with other family members or relatives, an individual may claim in respect of the portion paid by him/her.

In some cases, the person residing in the nursing home may pay some of the costs from his/her own income and this can affect a claim. Before calculating the relief, any costs paid by the resident in the nursing home is deducted from the claim (or a maximum deduction of 60% of the resident's income ) For example:

You maintain a dependent in a Nursing Home and you claim relief in respect of the expenses, which total 15,000. Your dependent has an income of 8,000, which is available directly or indirectly towards the costs.


Health Expenses attributable to Dependent

15,000


Deduct: 60% of Dependent's Income (i.e.) 8,000 x 60%

4,800


Health Expenses claimable by you

10,200

Δ Employing a Carer - Tax Credit
Where a person is permanently incapacitated due to physical or mental infirmity, a tax allowance of up to 30,000 is available towards the cost of employing a person to care for the incapacitated person. This credit may be claimed either by the incapacitated person or by a relative including relatives by marriage.

Δ Dependent Relative Tax Credit
This tax credit is available if you are maintaining either:

  • a relative of you or your spouse who is so incapacitated by old age or infirmity as to be unable to maintain himself/herself.
  • your or your spouse's widowed mother/father whether she/he is incapacitated or not
  • a child of yours who lives with you and on whose services you are dependent because of old age or infirmity.

The Dependent Relative Tax Credit for 2004 is 60 . No credit is due if the dependent relative's income in the year 2004 exceeds 10,373 . You no longer need to qualify for the dependent relative tax credit in order to claim health expenses in respect of a dependent relative.

Δ Covenants
Covenants may still be made for people over 65 or those who are permanently incapacitated.

A Deed of Covenant is a legal document under which one person agrees to pay a certain sum of money each year to another person. The advantage is that the person paying the money can effectively not pay tax on it. The money is transferred to someone who does not have a taxable income or pays a lower rate of tax than the person giving the money.

The covenant is a legal document but you do not need to go to a lawyer to draw one up. The tax office will give you a standard form of covenant or you may get one from the bank. The covenant must be capable of lasting at least 6 years. The person who covenants the money may not end the covenant unilaterally but both parties may agree to end it. This may happen before the 6 years are up but that does not matter as long as it was capable of lasting when it was made.

There is no tax relief on most covenants, other than covenants for the benefit of the elderly (over 65), permanently incapacitated people, maintenance payments between spouses, research and the teaching of natural sciences and recognised human rights organisations. Most covenants are subject to a 5% income restriction, except for covenants for the permanently incapacitated and those for maintenance payments between spouses.

Δ Rules
Rates
: The Dependent Relative Tax Credit for 2004 is 60 .

Δ How to apply
Download and complete Form MED 1 (PDF) at the end of the tax year and send it with receipts for the expenses incurred together with your tax return form to your tax office.

Additional information is available in the Revenue information leaflets IT 45 "Tax Credits and Reliefs for over 65's" (PDF)and IT46 "Dependent Relative Tax Credit" (PDF) which are also available from any tax office, the Revenue website or from Revenue's forms and leaflets service at Lo Call 1890 306706.

Δ Where to apply
Call or write to your local tax office.







 

If you require Information regarding Resident Financing,
Please Telephone Oaklodge Nursing Home
021 4646080
or
   
Email :  info@oaklodgenursinghome.ie

OakLodge Nursing Home, Churchtown South, Midleton, Co. Cork.


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