One of the most anticipated aspects of Budget 2017, the new “help-to-buy” tax rebate scheme was introduced on October 11th to assist potential first-time home buyers with gathering a deposit.
With housing demand vastly outpacing supply, particularly in Dublin and other densely populated areas, the government is keen to stimulate the building of new homes and help thousands of interested and qualified residents achieve the dream of home ownership.
Read on for details of this new tax rebate scheme and how it may help you purchase your first home.
What is the “help-to-buy” scheme?
The new scheme offers first-time buyers an income tax rebate of 5% of the purchase value of a newly built home priced up to €400,000. This translate as a tax rebate of up to €20,000.
First-time buyers who purchase homes costing between €400,000 and €600,000 qualify for a rebate capped at €20,000. Homes priced over €600,000 are not eligible for a tax rebate scheme.
Does it apply to all first-time buyers?
The help-to-buy tax rebate applies only to purchases of newly built homes. Part of the goal of the new tax scheme is to incentivise the building of new homes at a more affordable level.
First-time buyers looking for properties in high-demand markets can anticipate seeing more new homes becoming available over the next couple years as a result of the help-to-buy scheme.
How does it help people buy homes?
First-time homebuyers must amass a deposit equal to 10% of the first €220,000 and 20% of the remaining amount of the price of a property in order to qualify for a mortgage. So for a property priced at €250,000, a potential buyer must save a deposit of €28,000.
With the new help-to-buy tax rebate scheme, they would qualify for a rebate of €12,500, effectively leaving them on the hook for only €15,500—which is a substantial difference.
The Central Bank has agreed to recognise the help-to-buy tax rebate as part of the deposit amount, so under the new scheme, once that buyer has saved €15,500, they can qualify for a mortgage (assuming they meet all other criteria).
How is the tax rebate delivered?
The tax rebate will be awarded as a “bullet refund”, meaning that qualifying buyers will receive the full rebate in one payment. The reason for this is so the tax rebate can be included in the Central Bank’s calculation of a buyer’s deposit. Proof of purchase is required to receive the tax rebate.
How long is the scheme available?
The help-to-buy rebate scheme is back-dated to include home purchases made since July 19th of this year and will be available through to the end of 2019. At that point, the scheme’s efficacy can be evaluated, and the government can decide to continue, amend or end the help-to-buy tax rebate.
If you have any additional questions about the new help-to-buy tax rebate scheme or whether you may be eligible to claim tax back on any other credits, taxes or deductions, email us at firstname.lastname@example.org or call our office directly at 059 8634 794.