The minimum spend to qualify for the scheme is €5,000 (incl VAT) which would entitle the homeowner to a tax credit of €595. The maximum tax credit available is €4,050, which equates to a spend of €30,000. You can spend more than this, but you won’t get the VAT refunded beyond that amount. The government believe the scheme has worked as intended, saying when they announced the extension: “the Home Renovation Incentive has continued to be very successful, with works on 36,543 properties notified to Revenue’s HRI online system (as of September 15, 2015). This represents more than €566 million worth of works involving some 5,975 contractors.”
So if you have been considering repairs or renovations to your home, it makes sense to look at the scheme.
Homeowners who use a compliant contractor can claim the VAT on their renovations over the next two tax years. So 13.5% of what is spent on the property will be returned as a tax credit, 50% the year after you carry out the work and the remainder the following year. Barry Flanagan, Chartered Tax Consultant for Taxback.com offers a worked example: If you hired a HRI qualifying contractor in April 2014 to renovate your home for €12,000 (before VAT at 13.5%). You claim your HRI tax credit in January 2015. Your HRI tax credit is €12,000 x 13.5% = €1,620. You receive your HRI tax credit of €810 in 2015 and €810 in 2016. If you are a PAYE worker, your HRI tax credit will be divided evenly across your pay dates for each year.
If you decide you want to carry out work on your home under the scheme, you should choose a contractor and ask them if they are compliant. It is not a matter of taking their word for it; Flanagan explained that checks are built into the system.
“Details of the work must be entered online by the builder/contractor — they cannot be entered by the homeowner,” Flanagan explained. “Therefore the homeowner will need to provide the Property ID. Once entered, the homeowner can enter their credentials and log in to review what has been input by the contractor. “
The Revenue are clear on this. A compliant contractor has access to a mobile app to easily update the details of the project as agreed, therefore, “If you don’t see the work details on HRI online, don’t engage the contractor.”
The homeowner does need to go online to access the scheme, but Flanagan says it is a system that Revenue has made straightforward, with clear guides available for contractors and homeowners at Revenue.ie.
Repair, renovation or improvement works qualify under the incentive, including septic tank repair or replacement, attic conversions, driveways, painting and decorating. Revenue recommend homeowners register all jobs on the system, even if they fall below the current €5,000 threshold. If you were to need further work to your property before the scheme ends, it could be enough to bring you up to the refund amount. All the work involved would have to be undertaken by compliant contractors.
Another important thing to be aware of is that Revenue also check that the homeowner is compliant before paying out a claim. “The online system is accessed via the Revenue Online System (ROS),” Flanagan explained.
“So it links directly to your Local Property Tax (LPT) status and a claim will not be accepted unless your LPT is up to date.
“In fact, it goes further than just your LPT. As you also have to input your PPS, Revenue can also use their records to check up your tax compliance status. We have cases where an outstanding income tax return from a previous year prevented a claim being paid.”
So if you are thinking of making an application under the scheme, ensure your tax affairs are in order first, or the cost of clearing an outstanding tax bill could eat into any savings.
DEALS OF THE WEEK
If you have not applied for the Water Conservation Grant, you must move quickly. The closing date for applications is this Thursday, October 8.If you didn’t register with Irish Water (IW) on or before June 30, you will not be eligible.
The Social Protection Department estimate that 700,000 eligible households have yet to apply. Every household that registered was to receive a letter from the Department inviting them to apply for the grant, but there are reports that many haven’t received the letter.
If you registered with IW but haven’t received a letter, contact the Department’s Water Conservation Grant Support Team at 0761 087 890 or 1890 100043. If you have a letter, apply at www.watergrant.ie.