The Help-To-Buy scheme was introduced in 2016 as an aid to first-time property buyers of new properties and those who wish to build their own home, while also acting as a stimulus for new housing construction. It is due to finish on December 31, 2019.
The incentive was introduced in order to ensure that first-time borrowers would not be locked out of the property market by the Central Bank rule changes which require mortgage applicants to have at least a 10% deposit for houses.
Effectively, the incentive works by granting an applicant a rebate of income tax (and in some cases Deposit Interest Retention Tax) paid over the previous four years, which will aid the first time buyer to attain their deposit.
As the scheme is designed to assist first time purchasers or individuals who are undertaking self-builds in meeting their deposit needs, a potential buyer/builder must have a minimum loan to value of at least 70%.
Some other key conditions of the scheme are as follows.
The maximum amount of rebate per property is the lower of three figures: 5% of the property price (or 5% of the completion value of the property in the case of self-builds); €20,000; or the amount of income tax and DIRT paid in the previous four years.
The scheme is open to purchasers of new or second hand houses, and is also available to those who intend on building their own home.
However, the applicant (or in the case of joint purchasers, both applicants) must be first time buyers.
They must buy or build their house prior to December 31, 2019. For persons intending on building their own home, the first draw down must occur prior to this deadline.
In practical terms, this means that planning must be in place, and property construction must commence, before that date.
You must live in the property for at least five years as your main home.
You must not have previously bought or built a house or apartment, either on your own or jointly with any other person
In the case of house purchases, the contractor you are purchasing your home from must be approved by Revenue.
In the case of self-builds, an applicant’s solicitor must register with Revenue and then verify the Help-To-Buy claim online, via Revenue’s online system.
Central Statistics Office data shows that about 4,000 one-off houses were built in the 12 months to quarter three of 2018, with about 14,500 units completed in 2017, including one-offs, apartments, and schemes.
Other tax incentives for one-off housing include the site-to-child exemption, and a stamp duty rebate scheme which will grant a rebate of up to two thirds of the stamp duty paid on the transfer of a site, where the site is acquired after October 11, 2017, where construction commences within 30 months.
Prospective first-time buyers or persons intending to self-build their own home should seek professional advice relevant to their own circumstances.
Chartered tax adviser Kieran Coughlan, Belgooly, Co Cork. (086) 8678296