What is the Help to Buy Scheme
The Help to Buy Scheme is designed to help first-time buyers to gather the deposit required to purchase or self-build a new house or apartment to live in as their home.
The scheme provides for a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid (but not USC or PRSI) over the previous four tax years.
Only the amount paid in tax can be claimed, up to a maximum of €20,000.
Who is eligible to claim under the Scheme?
A first-time buyer of a house or apartment who purchases or self-builds a new residential property between 19 July 2016 and 31 December 2019.
- If you are buying (or self-building) the property with someone else, they must also be a first-time buyer. You will not qualify if you have previously bought or built, either individually or jointly with anyone else.
- The first time buyer must occupy the home, for a period of five years from the date the property is habitable.
- In all cases, the claimant must be fully tax-compliant in respect of the 4 years immediately prior to ther claim and if they have not already done so, they will need to complete online Form 12 (PAYE) and Form 11 (self-assessed) in respect of each of those 4 years and pay any outstanding taxes that are due.
- You must take out a mortgage of at least 70% of the purchase price with a qualifying lender (or, for a self-build, 70% of the valuation approved by the mortgage provider). The loan should be entered into solely by the first-time buyer and the lender. A guarantor on the loan is allowed.
Cash buyers do not qualify.
If you signed a contract to buy a property (or drew down the first tranche of the mortgage for a self-build) before 19 July 2016, you will not qualify.
What properties qualify for the Scheme?
- The property must have been purchased or built as the first-time buyer’s home.
- It must be a new build and the construction must be subject to VAT in Ireland.
- Properties which have never been used as a dwelling and are now being converted for residential use may qualify. However, extending or renovating an existing dwelling such as an old cottage would not qualify.
- The contractor building or developing the property must be a Revenue approved qualifying contractor. The current list of Developers/Contractors who are registered as a Qualifying Contractor are available on Revenue.ie.
What is the Scheme worth to Claimants
The tax relief is the lesser of:
the amount of income tax and DIRT you have paid in the fours years prior to the purchase or self-build or the amount of relief calaculated per the table below.
| Purchase price or valuation | Amount of relief |
|
Up to €400,000 |
Up to 5% of purchase price* |
| Between €400,000 and €600,000, between 19 July 2016 and 31
December 2016 |
Maximum relief will be
€20,000 |
| Over €600,000, between 19 July 2016 and 31 December 2016 | No relief |
|
Between €400,000 and €500,000, from 1 January 2017 |
Maximum relief will be
€20,000 |
| Over €500,000, from 1 January 2017 | No relief |
*For self-built properties the purchase value means the approved valuation by the lender at the time that the loan is entered into.
How to claim
The claimant must apply and claim for the Scheme online directly. PAYE employees must register for Revenue’s My Account service and Self Assessed Taxpayers must register for Revenue’s Online Service (ROS).
There are 3 stages to the process:
1. First Time Buyer Application
The First Time Buyer Application allows the claimant to apply as an individual or as a group. A group is made up of more than one person, including married or civil partner couples. It
can also be 3 or more related or unrelated taxpayers. All the individuals within a group must be first-time buyers If compliant, you will be given the maximum tax relief based on the tax paid and an application code.
2. First Time Buyer Claim
As part of the claim process you will have to supply details of the property being purchasing and details of your mortgage. The tax relief will be calculated and you will be informed of the amount and given a claim reference number. This will be issued to the claimant by MyEnquiries.
3. Verifying the Claim
When the claim is submitted, the details will need to be verified by the Developer/Contractor you purchased from or a Solicitor, acting on your behalf, in the case of a self-build. You will need to provide them with both your Application code and your HTB access number (provided in your MyEnquiries record). Refunds will be processed and paid as soon as possible after the details are verified.
|
Type of Applicant |
Relevant Dates |
Criteria |
How is the refund paid |
|
Retrospective applicants |
Contract signed between 19 July
2016 and 31 December 2016 |
In the case of a self-build home, you must have drawn down the first tranche of the relevant mortgage on or after 19
July 2016 |
The refund will be paid directly to the claimant’s nominated account |
| First-time buyer applicants | Contract signed between 1
January 2017 and 31 December 2019 |
It is your responsibility to ensure that your
contractor is registered as a Qualifying Contractor prior to purchasing your home. A list of registered qualifying contractors can be viewed on www.revenue.ie |
The refund will be paid to the approved Developer/Contractor
as part of the deposit required from the first- time buyer. |
| First-time self- build applicants | Self-builds between 1
January 2017 and 31 December 2019 |
The information provided at application stage will
be verified by your Solicitor. |
The refund will be paid to the mortgage institution. |
Clawback of the Relief
Clawback will happen where:
- the house is not subsequently purchased by the claimant within two years from the date of the making of the refund payment, or
- if, in the opinion of Revenue, there are reasonable grounds to believe that the purchase of the house will not be completed within that two year period or.
- the house is not used as the claimant’s principal private residence for a period of five years
There will be some flexibility around the two-year period where Revenue are satisfied that the qualifying residence is substantially complete at the end of the two year period or is likely to be completed within a reasonable period of time thereafter.
Some Practical Questions Answered
If an individual worked abroad during the previous four years
The relief is based on income tax and DIRT paid over the previous four years. You may be eligible for some contribution from the incentive depending on your circumstances. For example, if you had worked in Ireland in Year 1 and spent Years 2 to 4 abroad, you may still qualify for some relief in respect of the income tax paid in Year 1.
If an individual has been unemployed and pays no tax
The relief available is based on the income tax and DIRT paid over the previous four years. If you have paid income tax during that period you may be eligible for some relief. The amount will be dependent on the amount of income tax paid. Where no income tax has been paid, there is no tax available to refund. However, depending on your circumstances you may be eligible for a refund of any DIRT paid over the four year period.
Can I use my potential Help to Buy refund as part of my mortgage application?
Yes. Once you complete an application, you will be shown the maximum relief available to you. You will also receive a HTB Number and an access code which can be provided to your lender to verify your Help to Buy claim.
The Role of My Solicitor in the Claim process
Where a claimant is self-building a new house, your solicitor is required to verify the claim. Before a solicitor can verify a claim, he or she must first apply to Revenue to be a registered solicitor for the Scheme. The Solicitor based on the information provided as part of the normal conveyancing process, need to verify the following aspects of the claim:-
- The names of the first time buyer(s)
- The property address
- The valuation/price (this is the approved valuation by the lender in accordance with the Central Bank Prudential rules)
If the information entered by the first time buyer in the claim stage matches with the information verified by the registered solicitor, Revenue will approve the claim. You can download the htb-2form here.
For more details, please feel free to contact Samantha Geraghty, Partner or Patrick O’Connor, Managing Partner on 094 9251333 or visit www.poconsol.ie.
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