I have dealt with a large number of property buyers over the last few years who have availed of the “Help to Buy” scheme to give them a helping leg up onto the property ladder.
Let’s take a look at it, shall we.
Firstly, the Help to Buy (HTB) Incentive scheme is managed by the Revenue Commissioners. It is aimed to help first time buyers (or self builders) of property and can be used to buy or self-build a home intended to be occupied by the buyers. This scheme is not for investors or for buying a buy to let investment.
How much is the property buyer entitled to? It is calculated on the income tax and deposit interest retention tax (DIRT) paid in the four years prior to the HTB application.
An enhanced temporary scheme was introduced in 2020 which allows an enhanced relief of up to €30,000.
Who can claim HTB?
To qualify for HTB the applicant must
- Be a first time buyer
- Buy or build a property
- Live in the home as a main home for 5 years after buying/building
- Be tax compliant
Being a first-time buyer means you must not have bought or built a property previously, either on your own or with another person. Your eligibility will not be affected by being gifted or inheriting a property previously.
The builder or person from whom you are purchasing the property must be Revenue approved. You can access a list of such builders/developers on the Revenue website.
Type of property
The property must be newly built and never have been used, and you must use it as your home. The maximum purchase price permitted now is €500,000 and your loan must be from a qualifying lender and comprise at least 70% of the purchase price.
How much can be claimed?
The lesser of
- €20,000 (€30,000 for enhanced relief)
- 5% of the purchase price
- The amount of income tax and DIRT tax paid in the four years prior to the application
Note: the enhanced relief scheme runs from 23rd July 2020 to 31st December 2021.
The refund is paid to the developer/builder or into your bank account if you are self-building.
How to apply for HTB
Before you apply for the HTB scheme you must ensure your income tax returns are submitted to Revenue and up to date. You must also have a tax clearance certificate, if appropriate.
You have some room to manoeuvre as to the four-year period which you will use to make your application. If you want to choose 2020 as a year in your application, you must have submitted your annual income tax return for that year and have received your statement of liability from Revenue regarding that year.
In this case your four-year period will be the four years from 2016 to 2019.
There are two stages in the application
- The application stage and
- The claim stage
The application stage involves an application using the MyAccount or ROS of Revenue.
When you make your application, you will be given an application number and a 6 digit access code, together with confirmation of the maximum amount you can claim.
The claim stage involves you uploading a copy of the contract for the property you are purchasing and evidence of your mortgage. Once you submit your claim you will be given your claim reference number.
You will need to give these numbers to your solicitor who will furnish them to builder/developer’s solicitor. They will need the claim reference and access code to draw down the funds to apply to the purchase price of your house.
Most builders/developers will allow you use the amount to which you are entitled and apply it to the deposit due on signing and returning the contract.
Revenue claw back of a tax refund under HTB scheme
Revenue has the power to claw back any tax refund claimed under the HTB scheme in certain circumstances. For example
- You were not entitled to the refund
- You do not live in the property for the required 5 years
- You did not complete the transaction to purchase the property
- You did not finish building the property.
For more information take a look at the Revenue website here.