Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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251. To ask the Minister for Finance if he will outline the tax treatment of the portion of rental income retained by participants in the fair deal scheme who rent out their home while in nursing home care. [15386/23]

Michael McGrath (Cork South Central, Fianna Fail)
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I am advised by Revenue that rental income of participants in the Fair Deal scheme who rent out their homes while in nursing home care is taxed in the same manner as any other rental income from a residential property.

The participant will be charged to tax under Case V of Schedule D on the full amount of their rental income. The participant is entitled to deduct certain expenses from the gross rent received and is then taxed on the balance, which is the rental profit.

Income tax relief is available to participants in the Fair Deal for their nursing home fees. This relief is provided for in section 469 Taxes Consolidation Act 1997 (TCA). Nursing home expenses may be claimed under the heading of Health Expenses. The relief in respect of nursing home expenditure is allowed at an individual’s marginal rate of tax. Where an individual avails of the Fair Deal Scheme, the amount relievable is limited to the contribution towards nursing home fees made by that individual. No relief is available in respect of any amount covered by the State. Relief for nursing home fees will reduce the amount of tax payable on the individual’s income, including any income from renting out that home.

For the year in which a participant in the Fair Deal scheme moves into a nursing home, that person may be eligible for Rent a Room relief (under section 216A TCA) on any income received from renting out a room or rooms in their home. This means that, where it does not exceed the current annual limit of €14,000, no income tax is due on income obtained from that source. The €14,000 limit applies to the gross payment received for the room and for services provided with the letting.

However, Rent a Room relief will not be available for subsequent years when the individual is resident in a nursing home and no longer living in the property, because it is a requirement of that relief that the property is occupied by the individual as their sole or main residence during the tax year. That means the individual would be taxable on rental income in the normal way as outlined above.