Dirt refunds will boost first-time buyers

Deposit Interest Retention Tax (Dirt) will be refunded for first-time buyers in a bid to stoke the housing market.

The perk would be in place until the end of 2017, and apply to deposits of up to 20% of the sale price, finance minister Michael Noonan told the Dáil.

“This refund will run until the end of 2017 in respect of savings up to a maximum of 20% of the purchase price,” he said yesterday.

“As a result, first-time buyers will be able to save for their first home and retain 100% of the interest that they earn on their savings.

“I would expect that the banks will introduce specific savings products to support this new initiative.”

The Dirt move was welcomed by Ray O’Connor of financial services company EY, who said: “The proposed DIRT refund for first-time buyers saving towards a house deposit is to be welcomed, though of relatively modest benefit given the low interest rate environment.

“The various initiatives mentioned by the minister, which aim to encourage increased housing supply, should help to support growth in lending volumes for banks operating in the Irish market.”

However, the Greens and Independent TD Lucinda Creighton, who was expelled from the Fine Gael parliamentary party last year, condemned plans to abolish an 80% windfall tax applying to chargeable gains on the disposal or development land which are attributable to planning decisions made since October 2009.

Ms Creighton said: “The abolition of the 80% windfall tax on rezoning is the result of months of lobbying by the Construction Industry Federation and the attendance by the Taoiseach at private dinners for bankers and developers.

“The original purpose of the tax was to prevent what happened in the boom times, when councillors were being lobbied to rezone agricultural based land to commercial, or residential to commercial land. The land would then be flipped for massive profits once the rezoning occurred. In essence, councillor votes could make millionaires of landowners overnight. It seems the Government is happy to ramp up this sort of behaviour once again.

“We need development of houses — but not in a haphazard frenzy where once again developers and bankers are circling the wagons and putting politicians under pressure to get land rezoned for their pet projects.”

Fianna Fáil environment spokesman Barry Cowen also said the move would have a negative impact on the market.