The Help to Buy Incentive Scheme: Building Slowly.
The Help to Buy (HTB) Incentive Scheme is now operational. It is designed to assist first-time buyers with obtaining the deposit needed to purchase or self build a new house or apartment. Any newly built or self built house or apartment purchased since 19 July 2016, up to a maximum value or price of €500,000 qualifies for the scheme.
The basic essentials are: –
- First-time buyers only, where more than one buying then all must be First Time Buyers;
- New build/self build since 19 July 2016. Properties which have never been used as a dwelling and are now being converted for residential use may qualify;
- Maximum value €500,000 for properties bought after 1st January 2017, €600,000 for properties purchased between 19 July 2016 and 31 December 2016;
- Maximum benefit 5% value of the property, to a maximum of €20,000;
- Principal Private Residences only, no investment properties;
- You must take out a mortgage on the property with a qualifying lender, to be used solely for the purchase or building of the property. The loan should be arranged solely between the first-time buyer and the lender, but a guarantor is allowed on the loan. LTV must be greater than 70%;
- You must be registered for myAccount (PAYE) or ROS (self assessed).
- The builder must be registered with Revenue for the Scheme.
- Subject to a clawback pro rata if you do not retain the property as your principal Private residence for 5 years.
The experience so far:
So far 80% of applications were deemed incomplete. As at February 3rd last of 2,196 applications only 432 were successful and had been approved, with 1,764 still pending. Not all will be successful!.
The figures quoted for the maximum possible benefit are hypothetical or theoretical only. The scheme is one of rebate or a refund of Income Tax and DIRT paid in the four years prior to the date of application. The applicable tax years for an application made in 2017, are for the tax years 2013 – 2016 inclusive. If you have not paid any Income Tax or DIRT in that period, then no rebate can apply. The maximum rebate available is the total amount of tax that you have paid in that period, but the benefit can never exceed 5% of the price of the property.
You must be fully tax compliant. If you have not submitted annual returns (Form12) for those years, you need to do so now. You will need Annual Balancing Statement’s (Form P21) from the Revenue for each of the 4 years in question. Self assessed Applicants must hold eTax Clearance.
Only 31 Builders/developers are registered for the Scheme so far. More registrations are expected to follow within the coming weeks and months.
Builders must also be fully tax compliant in order to register any particular property. They must have up-to-date Tax Clearance Certificates. They must register all properties that qualify for the scheme or are likely to qualify for the scheme during its lifetime. They cannot register individual houses or developments on an ongoing basis.
The benefit will be paid by the Revenue directly to the Builder and never to the Applicant/Purchaser.
How does it Work?
Applications can only be made on line. Firstly, there is the application stage, where you are required to provide your PPSN and a completed declaration. Provided you are tax compliant, you will then be provided with an Application Number and a summary of the maximum relief available to you. You will then be issued with an Access Code separately through “MyEnquiries” in ROS. This information is crucial, your builder or solicitor will require this information to verify your tax relief claim. Keep this information safe.
Secondly, you enter the Claim Stage once you have signed the contract for your home and are ready to make your claim.
Full details can be found on www.revenue.ie.
The Moral of the Story so far:
It’s building slowly, there is a lot of hoops to jump through and paperwork for builders/developers to register their properties for the Scheme. Numbers will improve, it’s in the builders interests to sell on their completed properties and there is an increasing demand for the little stock we have of competed properties.
For you, the first time buyer, get your ducks lined up in a row. Submit your Tax Returns for 2013 – 2016 now, get your P21 Balancing Statements and Summary of Maximum Benefit and Good luck in your quest for your New Home.
Declan O’Toole BCL TEP has been acting for andassisting clients in purchasing and selling property for more than 32 years.