We will look at a parent moving to a nursing home. I had a meeting with two kind and caring sisters during the week. They are looking after their elderly mam in her home. We’ll go through the following points to get into more detail
- Background
- Nursing home cost
- Tax relief
- Keep their mam at home
- Summary
Background
I met Thelma and Louise on Thursday afternoon in the office. Their mam, Faye Doneaway, is living in Kilkenny City. She is 88. Faye is living alone as her husband Tom passed away 8 years ago. Health-wise, she’s struggling. Her mobility isn’t great, and the dementia is getting worse. It aint no fun getting to this stage of life!
Thelma and Louise are unsure of what to do. They want to keep her at home as much as they can, as that’s what their mam’s wishes are. But they know too that it’s becoming more difficult as their mam needs constant care. It’s an emotionally trying time for them. Moving their mam to a nursing home is going against her wishes, but they want to do the best for her too. So, the nursing home option could be the best route given the care and security their mam would have.
Faye has a nice house in a good area that’s worth a few bob. She has €150k in savings and has pension income of €32,000. Financially, she’s ok to pay for the nursing home costs for a few years.
Nursing Home Cost
Dr Google tells me the average nursing home cost in Ireland is €1,564 per week. I will assume this includes nursing home fees in Dublin, which will be more expensive. For Kilkenny, I will estimate the cost to be €1,300 per week or €67,600 per annum. Eye-watering numbers. If Faye goes into a nursing home on 1 July 2025, she will pay €33,800 for the rest of the year. Her income in this period would be €16,000.
| Income | €16,000 |
| Nursing Home | €34,000 |
| Shortfall | (€18,000) |
| VHI & House running costs | (€3,000) |
| Total Shortfall | (€21,000) |
| Savings | €150,000 |
| Balance left | €129,000 |
I didn’t include the tax refund she would get for paying the nursing home fees, as I have included her full income.
2026
For 2026, we have the first full year of nursing home fees.
| Income | €32,000 |
| Nursing Home | €68,000 |
| Shortfall | (€36,000) |
| VHI & House running costs | (€6,000) |
| Total Shortfall | (€42,000) |
| Savings | €129,000 |
| Balance left | €87,000 |
With an annual shortfall of €42,000, it would be the start of 2029 when Faye runs out of money.
VHI & Household costs
Faye may not need such an expensive medical insurance policy when she goes into a nursing home. Also, if Faye rented her home, that could bring in an extra €1,500 a month or €18,000 per annum.
Renting the house over her time in a nursing home would be tax-free and reduce the home running costs too.
Louise asked me about stopping her mam’s VHI payments should her mam go into a home. I have no idea about the right answer to that question. Based on some research, I picked up two things
- It seems you can’t cancel a medical insurance policy during the year, but only at the renewal date. That is, unless there’s a death, you are moving abroad, or a separation/divorce.
- Many older people have more expensive policies that they are paying for and may not need if they are in a nursing home. The advice is to review these to see if there are savings.
Tax Relief
Tax relief on nursing home costs is available at the 40% tax rate. The tax relief you get will depend on your income and the amount you pay. Based on the previous examples, we see that Faye’s income is €32,000. As her income is taxed at 20%, Faye only gets tax relief at that rate. If we look at 2025, it would be
| Faye’s Income | €32,000 |
| Less Nursing Home Fees | (€34,000) |
| Taxable Income | €0 |
| Tax Paid | €2,175 |
| Tax refund | €2,175 |
Let’s look at another taxpayer, Bridget, who is in a nursing home for 6 months of 2025, paying the same as Faye. But Bridget has an income of €70,000 in 2025.
| Bridget’s Income | €70,000 |
| Less Nursing home fees | (€34,000) |
| Taxable Income | €36,000 |
| Tax €36,000 x 20% | €7,200 |
| Less Tax credits | (€4,225) |
| Tax liability | €2,975 |
| Less Tax Paid | (€14,975) |
| Tax refund | €12,000 |
The tax relief that Bridget gets is a mix of the higher and lower rate. In 2025, she can earn up to €44,000 at the 20% rate, so her income at 40% is €26,000. As such, she gets tax relief at 40% on €26,000 of her income and at 20% on €8,000 of her income.
| €26,000 x 40% | €10,400 |
| €8,000 x 20% | €1,600 |
| Tax refund | €12,000 |
Amount you get tax relief on
The amount you get tax relief on is the full cost of maintaining an individual in a nursing home, where the claimant
- Has actually defrayed such cost; and
- Has not been reimbursed, directly or indirectly, by the nursing home resident or by a third party in respect of the cost. (If so reimbursed, you can claim tax relief on the amount paid less the amount reimbursed.)
Louise has a great job, and she decides to pay half her mam’s nursing home fees in 2025, being €650 a week. But her mam pays Louise €250 a week from her pension. In that case, Louise can claim €400 per week. Even though Louise pays €650, she is reimbursed €250 by her mam.
Similarly, if you are on the Fair Deal Scheme, you will only get tax relief on what you pay and not the Fair Deal contribution.
Keep their mam at home
As we know, the main wish is to keep their mam at home. Given the worsening health condition of Faye, the two ladies may need to get specialist care. Getting this care into the home could be through an agency or by employing a carer.
Tax relief is available where qualified nurses are engaged on the advice of a medical practitioner to provide nursing care in the home. To get the relief, you’ll need a letter or a medical cert which
- confirms the patient’s illness
- states that constant nursing care by qualified nurses in the patient’s home is needed; and
- Covers the full period for which home nursing is being claimed.
The nurses providing the care must be qualified, and their names, addresses, and qualifications provided. Also, you will need receipts for all payments to the nurses that show a breakdown of the costs. The reason is to ensure tax relief only applies to the nursing care and not to the nurse’s expenses.
Employing a Carer
You can do this in one of two ways. You either hire directly or through an agency or other commercial body. If you employ and pay a carer directly, you are the employer, so you must register as an employer and run a payroll. This will entail issuing payslips and making Revenue submissions for each pay period.
If you pay an agency, the agency will provide the carer, and it is the agency that is the employer and not you. You can claim tax relief at your top tax rate on the lower amount of
- The actual cost of employing a carer or
- €75,000 per each incapacitated person
Where two or more people are employing a carer for their incapacitated relative
- The relief cannot be more than the yearly limit, and
- The relief granted to each person will correspond to the costs they have paid
Fair Deal
I know people reading this will be thinking that he hasn’t even mentioned the Fair Deal Scheme. There is a reason for that. I know very little about it. I haven’t been through an application with a client. So, I don’t want to comment on something that I don’t know an awful lot about. This is something that I will write about in the future when I know more. Per the information on the Citizens Information site, there are 4 steps involved
- Fill in the application form
- Complete a Care Needs Assessment
- Complete a Financial Assessment
- Apply for a Nursing Home Loan (this step is optional)
Summary
Thelma and Louise are trying to do their best for their mother. Moving to a nursing home is an emotional time. They don’t want to go against her wishes, but it’s coming to a time where they have to make some difficult decisions. Faye is in a fortunate position that she has enough funds until the end of 2028 to meet the costs. Those not as fortunate will rely on the fair deal scheme and family support to meet the shortfall.
Finding a suitable and caring nursing home is another step on the journey. One that is convenient and where your mam or dad feels comfortable. After all, we will be like Faye too someday. Our hope is that we will have such kind and caring children who will do their best for us. My daughter told me she’d pay my nursing home fees and has a nice, small house picked out for me in Tramore!
When Neil Young bought a ranch in California, there was an elderly groundsman on that farm. He wrote a song called Old Man about the groundsman and the likeness to himself.
“I’ve been first and last
Look at how the time goes past
But I’m all alone at last
Rolling home to you
Old man, take a look at my life, I’m a lot like you
I need someone to love me the whole day through
Ah, one look in my eyes and you can tell that’s true.”
Look after the old folks well. Need help with your taxes? Start here
