Fair Deal and the Family Home

The fear that sends most families searching is that the house will be taken, or will have to be sold quickly and badly to fund care. Neither is how the scheme works. The house is one asset among several in a financial assessment, the amount it can be asked to contribute is capped, and the payment itself can be deferred until after death.

What you do with the property — sell it, rent it, leave it empty — is a separate decision, and a genuinely open one.

The HSE financial assessment produces a weekly contribution. You pay 80% of your income, after allowable deductions, plus 7.5% of the value of your assets per year. If you are part of a couple, the assessment is based on half of the combined position, so the rates become 40% of income and 3.75% of assets.

The first €36,000 of assets is not counted — €72,000 for a couple.

Two details matter more than people expect. The assessment uses the net value of an asset, meaning market value less any borrowing taken out to buy or improve it, so an outstanding mortgage reduces the figure. And it looks at assets transferred in the five years before the application, so signing the house over to a child shortly beforehand does not take it out of the assessment.

Most assets are assessed for as long as the person is in care. The family home is not. It falls under the three-year cap, which means the 7.5% contribution is charged on it for a maximum of three years and then stops — even if care continues for another decade.

Two further points worth knowing. The cap applies whether or not you take the Nursing Home Loan, so deferring the payment does not cost you the protection. And if the person has already been in a nursing home for three years at the point of applying, the 7.5% on the home is not charged at all.

This is the part families most often have wrong, and getting it wrong changes the decision.

The widespread belief is that selling converts a capped asset into ordinary cash, which is then assessed at 7.5% a year for as long as care continues. On that understanding, selling looks like it throws away the single biggest protection in the scheme.

It does not. Citizens Information sets out that the three-year cap applies to your home, the proceeds of the sale of your home, and your farm or business. The proceeds carry the cap with them.

So selling is a decision about the property, not a trap in the scheme. The real questions are the ordinary ones: whether anyone is living there, whether it is deteriorating while empty, what insurance costs on a vacant house, whether the family wants to keep it, and what the money is needed for.

One practical point. An empty house is usually a depreciating one, and unoccupied property insurance is both more expensive and more restrictive than ordinary cover. Families who decide to hold often underestimate the running cost of doing nothing.

This changed materially on 1 February 2024, and a lot of advice written before then is now wrong.

Previously, rental income was assessed like any other income, so 80% of it went towards care and letting the house was barely worth the trouble. Now, if the property is the person's own home — their principal private residence — you can apply to keep 100% of the rental income.

It is an application, not automatic. You complete the Principal Private Residence Rental Income form and send it to the local Nursing Homes Support Office with the RTB registration approval, the rental agreement showing the amount, and the latest Revenue notice of assessment. The tenancy normally has to be registered with the RTB unless the arrangement is exempt from registration.

Note the limit: this applies only to the person's own home. Rental income from any other property they own is still assessed at 80%.

For a family weighing sell against hold, this is the change that matters most. Holding the house and letting it now produces real income rather than a token.

Also called Ancillary State Support. Rather than paying the 7.5% property contribution as you go, you can apply to defer it. The amount is secured against the property and repaid to Revenue after death.

It is optional, and it exists precisely so that nobody has to sell a house to fund care in the short term. Because the three-year cap applies either way, deferring costs you nothing in protection — it is a cash-flow decision.

It is worth taking advice on, because the loan becomes a charge on the property and affects what the estate looks like afterwards. That is a conversation for a solicitor rather than a web page.

The 7.5% is applied to the value of the property, so the valuation is not a formality — it sets the number the contribution is calculated from, and on a capped three-year basis it determines the total.

On a €300,000 house a single applicant contributes €67,500 across the three years. A valuation €40,000 too high adds €9,000 to that. It is worth having the figure done properly by someone who knows the local market rather than accepting a round number.

The HSE can ask for an updated valuation, and families applying while also considering a sale often need a valuation and a sale appraisal at the same time. They are different exercises and it is reasonable to ask for both.