Tax relief on nursing home fees and for dependent relatives

Information

If you have to pay nursing home fees in Ireland, you may get tax relief on those payments. This is of use only for people who have an income above the tax exemption limit. You should contact your Inspector of Taxes immediately and arrange for the tax relief, as you may well need it in order to actually pay the fees.

Tax relief for nursing home expenses is claimed under the general scheme for tax relief on certain medical expenses. Maintenance in a hospital or approved nursing home qualifies for relief. Most nursing homes are approved for tax relief. View a list of the hospitals and nursing homes that are approved for tax relief here.

A long-term patient in a nursing home who pays tax under PAYE can apply to have the expenses allowed in his or her tax credit certificate. For additional information see Revenues information leaflet IT 6 Medical Expenses Relief .

A relative or other person who pays the nursing home expenses on your behalf may also claim relief on the expenses. Up to and including the 2006 tax year, only a relative who qualified for the Dependent Relative Tax Credit could claim the relief, but from the 2007 tax year onwards, anyone who pays the expenses can claim the relief.

Employing a Carer - Tax Credit

Where a person is permanently incapacitated due to physical or mental infirmity, a tax allowance of up to €50,000 is available towards the cost of employing a person to care for the incapacitated person. You can claim this at your marginal tax rate. This credit may be claimed either by the incapacitated person or by a relative including relatives by marriage.

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 is €80. If the income of your dependent relative exceeds €13,473 in 2008, no tax credit is due. All of your dependent relative's income (for example, social welfare payments, pensions and deposit interest) is taken into account for income limit purposes.

You no longer need to qualify for the Dependent Relative Tax Credit in order to claim health expenses.

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. Read more about deeds of covenant .

Rates

The Dependent Relative Tax Credit is €80.

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 306 706.

Where to apply