One of the most frequently misunderstood areas in the Nursing Home Support Scheme — widely known as the Fair Deal Scheme — is how rental income interacts with the financial assessment. The assessment rules for Fair Deal (officially the Nursing Home Support Scheme) have evolved significantly since the Nursing Homes Support Scheme Act of 2009.
What’s the catch?
The 100% rental income exemption sounds like a perfect financial win. However, taking advantage of this rule can expose applicants to other long-term care costs, potential income tax liability, and strict rental market regulations.
The Broader Picture: nursing home support scheme for the “Accidental” Landlords
The Irish Government welcomed new changes to the rental sector, effective from 1 March 2026, which apply only to vacant principal homes. The nursing home resident can keep 100% of their rental income. This critical exemption ensures that the rent generated is entirely excluded from the financial assessment and does not increase an individual's weekly co-payment toward care costs. Here's a broader picture of how principal homes are now treated under the scheme:
- Letting the Principal Home
In the past, rental income from a family home was heavily taxed, leaving families with little money left to pay for property upkeep, taxes or letting fees. However, under legislation that came into effect, residents who let out their main private residence while in care are entitled to keep 100% of the rental income.
The Benefit: This income is not counted toward the 80% assessable income contribution required by the Health Service Executive (HSE) for care.
The Goal: This change was intentionally designed to encourage families to make vacant properties available in the private rental market without the fear of it severely inflating their nursing home bills.
- Renting Out Non-Principal Properties
If the property you rent out is not your principal private residence (i.e., a second home, a holiday home or an investment property), the 100% exemption on rental income does not apply. For these properties, the HSE assesses rental income as general income, meaning that 80% of the rental income must go directly toward your nursing home care costs. Furthermore, the expenses relating to general maintenance and management of the second property are not accepted as allowable deductions by the HSE when determining your income contribution.
- The 3-Year Cap and Asset Assessment
The family home is treated preferentially under the Fair Deal scheme:
- The 3-Year Limit: Contributions based on the value of your principal residence are capped at 7.5% of the property’s value, and this charge only applies for a maximum of three years, regardless of how long the resident stays in care.
- The Nursing Home Loan: If you do not have the ready cash to pay this 7.5% asset contribution, you can apply for a Nursing Home Loan (Ancillary State Support). This acts as a deferred charge (similar to a mortgage) placed on the property by the State, which is typically repaid upon the sale of the house or within 12 months following the resident's death.
Important Considerations for Landlords
To take advantage of the exemptions and successfully navigate property management in Ireland, the tenancy must be properly registered with the Residential Tenancies Board.
You are legally required to inform your HSE Local Nursing Homes Support Office of any changes in circumstances—including renting out your home—within 10 working days. Failure to do so can result in financial penalties.
Though the HSE won't take a cut of your principal residence's rental income for nursing home fees, that income remains completely taxable by Revenue. Landlords must declare this rental income in their annual tax returns.
The Financial Assessment: What to Prepare
If you're approaching a Fair Deal application and rental income is part of the picture, the following documentation is typically required:
- Proof of rental income (lease agreements, bank statements, Revenue rental income returns)
- Details of deductible expenses (mortgage statements, insurance, management fees)
- Confirmation of whether the property is the principal private residence or another asset
- Any tenancy-related documents registered with the Residential Tenancies Board (RTB)
- Having this information organised in advance makes the assessment process considerably smoother and reduces the risk of delays.
A Note on Timing
The Fair Deal application timeline can take several months from initial submission to approval. Rental income received during this period is still assessable. If you are considering a significant decision — such as renting out the family home — it is worth taking advice before the tenancy begins, not after. Changes in circumstances during the period of care can trigger a review of the financial assessment, and rental income that commences after the initial assessment is disclosed at that point.
Life Impact of the Decision
The Fair Deal Scheme is, at its core, a means-tested system designed to ensure that care costs are allocated fairly based on what a person can contribute. The treatment of rental income is consistent with that principle — it is a form of assessable income, and it is treated accordingly.For many families, the decision about whether to rent out the family home is not purely financial. You should weigh the emotional dimensions, family dynamics, and practical considerations around property management.
That is why most Fair Deal Scheme advisors in Ireland caution against making that decision — in either direction — without a clear understanding of the financial consequences. In my experience, families who make informed decisions, even difficult ones, are much better able to manage the care journey with confidence and without unexpected financial surprises later on.
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