Help to Buy Scheme

What Is The Help To Buy Scheme?

The Help to Buy Scheme (“the Scheme”) was introduced in July 2016 to help first-time buyers buy or self-build a new residential property. The Scheme is available until 31 December 2019 and allows first time buyers to claim a refund of income tax and DIRT paid over the previous 4 tax years and to use this refund as part of the deposit for the purchase of a new residential property.

Who Is Eligible Under The Scheme?

There are certain conditions that must be satisfied in order to avail of the relief. The main conditions are:

• it only applies to properties that are bought or built as the first-time buyer’s home. It does not cover investment properties;
• the Scheme only applies to properties costing €500,000 or less;
• you must take out a mortgage worth at least 70% of the purchase price. Cash buyers do not qualify;
• you must occupy the property for 5 years from the date that it is habitable. If more than one person is purchasing the property it is only necessary that one of them is going to live in it as their home. If you do not live in the property as your main home for the required 5 years, the Revenue can claw back the relief;
• the contractor you are purchasing your home from must be approved by Revenue. There is a list of the contractors that have signed up to the scheme on the Revenue Commissioners website, www.revenue.ie;
• if you are buying the property, you must have signed a contract to buy that property on or after 19 July 2016. If you are self-building, you must have drawn down the first part of the mortgage on or after that date; and
• if you are buying (or self-building) the property with someone else, they must also be a first-time buyer. You will not qualify if either of you have previously bought or built a property, either individually or jointly with anyone else, even if you are now separated or divorced from that person.

How Much Can You Claim?

The Scheme offers a refund of income tax and DIRT paid by the buyers over the previous 4 years, up to the greater of 5% of the purchase price of a new house or 5% of the completion value of a self-build. The purchase price or completion price of a new property is capped at €400,000.00, meaning the maximum relief that can be claimed is €20,000.00, even where more than one person claims the relief.

How To Apply

You make your application for the Scheme through the Revenue’s myAccount website if a PAYE employee or the Revenue ROS website if self-employed. This is a self-assessment scheme, so you must ensure you furnish the Revenue with the correct details in order to be satisfied that you are eligible for the relief. The application process consists of two stages, the Application stage and the Claim stage.

Once both stages are complete and provided you qualify for the Scheme, the Revenue Commissioners will issue the rebate directly to the Contractor/Developer in the case of the purchase of a new property as part of the purchaser’s contract deposit or to the lending institution in the case of a new build.

Revenue Claw Back

Revenue can claw back refunds if:

• you were not entitled to the refund;
• you do not live in the property for a minimum of five years;
• you did not finish the process to buy the property; or
• you did not finish building the property.

Revenue can claw back refunds from the contractor if:

• the property is not bought by you within two years from when the refund was made to the contractor; or
• Revenue has reasonable grounds to believe that the property will not be bought by you within that two-year period.

There is some flexibility around the two-year period. This can apply if Revenue is satisfied that the property is either:

• almost complete at the end of the two years; or
• likely to be completed within a reasonable time period.

The Future

Revenue have yet to clarify if those who exchange contracts by 31 December 2019 will be able to benefit from the Scheme. The Scheme is currently only available until 31 December 2019 and it remains to be seen if it will be extended by the Government.

Please contact Michelle McArdle, in the Real Estate Department of BHSM on 01 440 8300 and mmcardle@bhsm.ie for further information.

 

This article is for general information purposes. Legal advice must be obtained for individual circumstances. Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.