Applications from first-time homebuyers for financial support under the Government’s Help-to-Buy scheme opened at the start of January this year.
The measure, introduced by Minister for Finance Michael Noonan in the budget last October, allows purchasers to claim a rebate of income tax already paid up to a maximum of €20,000, depending on the value of the property.
It is designed to help first-time buyers meet tougher deposit requirements under Central Bank mortgage lending rules, rules that have since been eased by the bank.
How does it work?
First-time buyers either purchasing newly built homes or building their own can apply for rebates via a form available at the website of the Revenue Commissioners – revenue.ie.
The scheme allows purchasers to claim back a rebate on income tax or Deposit Interest Retention Tax (Dirt) on bank savings paid over the four years prior to the year they are buying or building their first home. If they have worked in Ireland for fewer than four years, or have paid only limited income tax, the amount available in any rebate will be lower.
Are there any limits?
The maximum rebate is 5 per cent of the value of the property, up to a maximum of €20,000. The rebate is available only on properties valued at €500,000 or less after an original, higher limit of €600,000 was reduced during the ongoing passage of the measure through the Oireachtas amid criticisms that it amounted to a "mansion grant".
Applicants must be borrowing at least 70 per cent of the value of the property. Under revised Central Bank rules, first-time buyers can borrow up to 90 per cent of the value of the property, so the rebate means most first-time buyers will need a deposit of just 5 per cent to secure their home.
If I have already bought, can I still apply?
Anyone who bought their first home since July 19th last year – as long as the property was newly built – is eligible to apply for the rebate. For people buying this year, or at some point between now and the end of 2019, the money will be paid to the developer directly. Applicants who bought their home in the latter part of 2016 will have the money paid into their accounts, as will those building their own homes. The scheme is available only to owner-occupiers, not to the investment or buy-to-let market, and applicants will need to live in the property for five years or face a potential clawback of the rebate granted.
How do I apply?
To complete the online application process, first-time buyers will need to upload a copy of the signed contract to purchase as well as details of the property, its purchase price and the completion date for the purchase. They will also need to provide details of the mortgage lender and of the mortgage, including the loan-to-value ratio. Clearly, purchasers will need to have paid either the full deposit if the home was bought in 2016 or the balance of the deposit due after the rebate to qualify.
Revenue will also need details of all purchasers of the property and how much of the rebate is going to each purchaser. The form requires details of the developer or contractor selling the property in the case of new homes or, for elf-builds, details of the solicitor acting for the purchasers and proof that the first tranche of the mortgage has been drawn down to paying for the self-build.
Once you complete the application, Revenue will confirm the details either with your solicitor (if you are building your own home) or the developer selling the home before paying out any tax refund. That will include officials ensuring the contractor or developer is tax-compliant and that all planning permissions have been complied with.
Apart from the form itself, applicants will also need to have registered with Revenue’s myAccount online service and complete a form 12 tax return for each of the years on which they are seeking a rebate of tax paid.
MyAccount is effectively a personal online account with the tax authorities through which you should be able to manage all your personal tax affairs, including income tax returns, local property tax and applications for the Home Renovation Incentive. From Revenue’s point of view, it ensures taxpayers are registered and on its radar and also that they avoid more cumbersome physical paper returns.
People not yet registered with myAccount will need their personal public service (PPS) numbers to do so along with their date of birth, phone number, email and home addresses.