Fair Deal Scheme Nursing Home Tax Relief Ireland 2025

Revenue-compliant guidance — Based on Revenue Tax and Duty Manual Part 15-01-12, s.469(2)(b) and s.5 (s.469 TCA 1997). Updated for 2025.

Under the Fair Deal scheme, only your personal contribution to nursing home costs qualifies for income tax relief — not the HSE-funded element. Your personal Fair Deal contribution qualifies at your marginal rate: up to 40% for higher-rate taxpayers, 20% for standard-rate taxpayers. This is one of the highest-value tax reliefs available and is claimable for up to four prior years.

What This Page Covers

• How the Fair Deal scheme works and what the personal contribution consists of
• Why only the personal contribution — not the HSE-funded portion — qualifies
• The marginal rate relief (up to 40%) and how it is calculated
• Who makes the claim: the resident, a family member, or multiple siblings
• The deferred asset contribution and why it does not qualify
• Documentation: nursing home invoices showing the personal/HSE split

Key Facts at a Glance

• ✓Only the personal Fair Deal contribution qualifies — not the HSE-funded portion of the nursing home cost.
• ✓Relief is at the marginal rate: up to 40% for higher-rate taxpayers, 20% for standard-rate.
• ✓An adult child who pays the personal contribution can claim at their own marginal rate.
• ✓The deferred family home asset contribution (repaid from estate) does not qualify.
• ✓Backdate up to four years — a missed multi-year claim can mean tens of thousands in recoverable relief.

How the Fair Deal scheme works

The Nursing Home Support Scheme — commonly known as Fair Deal — was introduced to fund long-term residential nursing home care for people who need it. Under the scheme, the individual (or their family) contributes a means-tested personal contribution toward the cost of care, and the HSE funds the remainder directly to the nursing home. The total nursing home fee is shared between the personal contribution and the HSE element.

The personal contribution is calculated on two elements:

• Income contribution: 80% of the resident’s assessable income per year (income includes pension, rental income, and other assessable sources).
• Asset contribution: 7.5% of the value of assessable assets per year, with a three-year cap on the contribution from the principal private residence (meaning the family home contributes at 7.5% per year for a maximum of three years).

The personal contribution is reviewed annually and can change as the resident’s income and assets change. The nursing home invoices the personal contribution amount directly to the resident or their family each month or week.

Why only the personal contribution qualifies for tax relief

Under Revenue’s health expenses guidance at s.469 TCA 1997, the qualifying principle is that the individual can only claim relief on expenses they personally paid. The HSE element of the nursing home cost is paid by the HSE directly to the nursing home — it is not a personal payment by the resident or their family. Only the personal contribution — the amount the resident or their family directly pays to the nursing home — qualifies as a personal health expense.

This distinction is sometimes confused because the full nursing home fee appears on invoices, with the personal contribution and HSE contribution set out separately. The qualifying amount for tax relief is always the personal contribution column only — not the total fee.

The marginal rate relief on nursing home fees

Unlike most health expenses which qualify at 20%, nursing home fees — including the personal Fair Deal contribution — qualify for income tax relief at the individual’s marginal rate. This means:

• Higher-rate taxpayer (above 40% income tax band): 40% relief on the qualifying personal contribution.
• Standard-rate taxpayer (within 20% income tax band): 20% relief on the qualifying personal contribution.

For a higher-rate taxpaying adult child paying a parent’s Fair Deal personal contribution of €12,000 per year, the annual tax benefit is €12,000 × 40% = €4,800. Over four backdated years, the total recoverable relief from that one contribution alone is €19,200. The marginal rate relief on nursing home fees is the single most valuable individual tax relief available to most families with elderly parents in care.

Who makes the claim

The person who personally paid the Fair Deal personal contribution makes the claim. This may be:

• The resident themselves: If the resident has taxable income (pension income, rental income, etc.) and pays the personal contribution from their own funds, they claim the relief in their own annual tax return. Pensioners who are PAYE-taxed on their pension can claim through myAccount.
• An adult child: If an adult child pays the personal contribution on behalf of a parent — from their own income or bank account — they claim the relief at their own marginal rate. If the adult child is a higher-rate taxpayer, they benefit from the 40% rate.
• Multiple siblings: Where several siblings contribute to a parent’s personal Fair Deal contribution, each sibling claims only the amount they personally paid, at their own marginal rate. The sibling paying the highest marginal rate benefits most. Families may consider structuring who pays what to maximise the combined family benefit.

The deferred asset contribution and the family home

The Fair Deal asset contribution calculated on the family home is typically deferred rather than paid during the resident’s lifetime. Under the Fair Deal rules, the family home asset contribution can be deferred for three years. During those three years, the HSE funds the home-based asset element of the personal contribution and recovers it from the estate after the resident’s death.

Because this deferred home-based asset contribution is not paid by the resident or their family during the care period — it is a post-death estate recovery by the HSE — it does not generate a qualifying health expense in the year of care. Only amounts personally paid during the resident’s lifetime qualify. The deferred contribution is settled from the estate and does not give rise to a health expense claim at any point.

Documentation and how to calculate the qualifying amount

To establish the qualifying amount each year, obtain the nursing home’s monthly or weekly invoices and statements. These should clearly show:

• The total weekly or monthly nursing home fee
• The HSE Nursing Home Support Scheme contribution
• The resident’s personal contribution

Add up the personal contribution amounts across all months in the relevant tax year. This total is the qualifying health expense amount entered in myAccount under Health Expenses for that year. Retain the nursing home invoices and statements for six years from the date of the claim.

If the invoices do not separately identify the HSE and personal contribution elements — some nursing homes invoice only the personal contribution amount — that invoice amount is the qualifying expense. Where documents are unclear, a letter from the nursing home confirming the annual personal contribution paid for the specified resident in the specified year is acceptable documentation.

How to claim and backdate Fair Deal contributions

After the end of the relevant tax year, the claimant logs in to myAccount at revenue.ie. Under PAYE Services → Review your Tax, select the relevant year and enter the personal Fair Deal contribution paid in that year under Health Expenses. Revenue applies marginal rate relief to nursing home fees automatically where the health expenses claim includes a qualifying nursing home amount.

If contributions have been paid for several years without claiming, all four years within the backdating window can be claimed in a single session — selecting each year in turn and entering the qualifying personal contribution for that year. For families where this has been overlooked for multiple years, MyTaxRebate handles Fair Deal retrospective claims as part of our standard service, identifying all qualifying years and submitting the claims through Revenue’s agent access system.

Scenarios

Common Mistakes to Avoid

• ✗Claiming the full nursing home fee — only the personal contribution column on the invoice qualifies.
• ✗Assuming Fair Deal “covers everything” so there is nothing to claim — your personal contribution is a substantial qualifying expense.
• ✗Not backdating when a parent has been in care for several years — four backdated years of marginal rate relief can be a very large sum.
• ✗Not structuring which sibling pays the contribution to maximise the marginal rate benefit.

When This Relief Does Not Apply

Key Takeaways

• ➤Your personal Fair Deal contribution qualifies at the marginal rate — up to 40% for higher-rate taxpayers.
• ➤Get nursing home invoices showing the personal/HSE split and total the personal contribution for each year.
• ➤Backdate four years — this is one of the highest-value backdatable reliefs available to Irish taxpayers.

Frequently Asked Questions

Related Guides

• Nursing home fees: complete tax relief guide
• Medical expenses for elderly parents
• Splitting nursing home costs between siblings
• Complete guide to medical expenses relief