Thursday 22 February 2018

Home economics... answering your property questions

Sister with dementia needs help.
Sister with dementia needs help.

Our property expert gives advice on the Nursing Home (Fair Deal) Support Scheme and a self-adminstered pension fund.

Question: My sister has dementia and needs a nursing home. She never married and my brothers and I want to avail of the Fair Deal scheme for her, but we're told it's far from simple as she lacks capacity to sign the forms. She has a house along with her pension and we don't know what to do next. It all seems very legal and expensive and we are all in our 70s.

Sinead replies: The Nursing Home (Fair Deal) Support Scheme is actually quite straightforward, with a medical and financial needs assessment, a home chosen, and the fees paid by the State with a contribution from the resident of 80pc of their income along with 7.5pc p.a. of their assets (with the family home capped after three years).

However, a complication arises where the individual themselves lacks capacity and has no spouse to complete the action.

As such, one of her siblings needs to become a 'care representative', a legal status which can only be done via the Circuit Court. There are letters to complete from her GP and Consultant confirming her condition.

An Affidavit and the application form, signed in front of a Commissioner for Oaths are also required. The costs of these are €15 and €130 respectively.

All have to be submitted 14 days before the Circuit Court hearing and (unfortunately) 'served' on your sister who has the right to reply (or object) to the proceedings. This may appear harsh and a bit archaic, but is a legal requirement and for her security.

My advice is to decide which of you will be the care representative; get letters from the others attesting to their willingness. Secondly, ask your sister's doctors to complete their forms.

Thirdly, a local solicitor (€50 - €100) will do all the work necessary if it's easier, but you can download all the forms yourself ( I accept it's all a bit confusing, but the system is there for her protection. Your sister is lucky to have you looking after her needs.

Question: I'm 49, self-employed and have been contributing to a personal pension for years, building up a considerable sum in it. As I'm not happy with the returns, I was thinking of buying property with some of it. A 'self-administered' pension fund has been suggested to me to facilitate this but wonder if it's all above board? I've never heard of these.

Sinead replies: Normally pensions cannot be accessed until retirement age whereby a certain amount can be taken as a tax free lump sum, with the balance used to purchase an annuity (pension) for life, or put into an Approved Retirement Fund (ARF) and drawn down by the owner as required, with certain limitations.

However, a self-administered fund is a flexible pension arrangement, provided its rules are met and can be used to purchase a property as an investor as it employs both these elements.

Barry Kennelly, Solicitor with explains: "On retirement 25pc of the fund is taken tax-free by the investor, (the first €200,000 is tax free and the balance up to €575,000 taxed at 20pc.) The property is transferred to an Approved Retirement Fund (ARF) and can continue to generate a post retirement income.

Property purchases are typically facilitated through a unit trust structure and a specific sub-fund is established to hold each property.

As a result, if borrowing to purchase the property, the other assets are protected, as the bank's only recourse is to the assets of the sub-fund and not the pension itself.

Furthermore, where VAT arises on a purchase, the sub fund itself can be registered for VAT without having to register the entire pension fund for VAT. One of the primary preclusions is that the vendor must be at "arm's length" from the scheme and personal use of the property is "prohibited".

The Ryan review

When this column writes about the rental market (which it does more often than it would like), the focus is often on the mid-priced element - the couples and workers struggling to find affordable accommodation in the suburbs.

However, the sizable poorer (and often voiceless) end of the population find their needs even less well met.

Simon Community's Locked Out Of The Market snapshot survey showed that 95pc of available properties could not be rented at current rent supplement/HAP payment levels.

Just 34 out of 746 properties across the country were within social welfare limits, with some locations having just one home qualifying. They are, not unreasonably, calling for an increase in housing payment to address this but Minister for Social Protection Joan Burton has said the last time it was raised, the rents simply caught up within a matter of months.

Ironically, the otherwise welcome two-year rent freeze by her colleague Alan Kelly has meant tenants are more likely to stay put, stagnating the market even further.

Even the banning of discrimination based on income source won't make a difference if the level is simply not enough in the first place.If any organisation has an untried idea which dovetails the various problems, I'm sure they'll both be all ears… or their successors will after February 26.

Indo Property

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