Open the Door to your new home –
Help to Buy Scheme
If a HTB applicant is self-building a house, his or her solicitor must verify the claim. Solicitors must first apply to Revenue to be a registered solicitor for the HTB incentive. Neil J. Butler & Co. Solicitors are Registered for this Scheme. The Help to Buy (HTB) incentive is a scheme for first-time property buyers. If you are a first-time buyer, it will help you with the deposit you need to buy or build a new house or apartment. You must buy or build the property to live in as your home. When you buy or build your home, the incentive will give you a refund of Income Tax and Deposit Interest Retention Tax (DIRT) that you paid in Ireland over the previous four years. let’s look at how it works…..
Who can claim the Help to Buy (HTB) incentive?
To claim HTB, you must:
be a first-time buyer
buy or build a new property between 19 July 2016 and 31 December 2019
live in the property as your main home for five years after you buy or build it
be tax compliant, if you are self assessed you must also have tax clearance.
To qualify, you must not have previously bought or built a house or apartment, either on your own or jointly with any other person. If you are buying or building the new property with other people, they must also be first-time buyers.
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.
Approved developers and contractors
The contractor you are purchasing your home from must be approved by Revenue. You can check the list of approved developers and contractors to make sure that your developer or contractor is approved.
What type of property qualifies?
To qualify for HTB, the property that you build or buy must be: your home newly built with the construction subject to Value Added Tax (VAT) in Ireland. The property must never have been used, or have been suitable to use, as a residential home. If the property was non-residential, but has been converted for residential use, it may qualify for HTB. If you buy or build the property as an investment, it does not qualify for HTB. Purchase value The purchase value of a new build means the price that you bought it for. For self-built property, the purchase value is the approved valuation by the lender at the time that you took out the mortgage. If you bought the property between 19 July 2016 and 31 December 2016, the purchase price must be €600,000 or less. If you bought it after 1 January 2017, it must be €500,000 or less. Mortgage You must take out your mortgage on the property with a qualifying lender. This loan must be used only for buying or building the property. The loan must be at least 70% of the purchase value of the property. This is known as the loan to value ratio. You are allowed to have a guarantor on the loan.
How much can you claim?
The amount that you can claim is the lesser of: €20,000 OR 5% of the purchase price of a new home. For self-builds this is 5% of the completion value of the property the amount of Income Tax and Deposit Interest Retention Tax (DIRT) you have paid in the four years before your purchase or self-build. The maximum payment is €20,000 per property. This cap applies regardless of how many people enter into a contract to buy a house. Universal Social Charge (USC) or Pay Related Social Insurance (PRSI) are not taken into account when calculating how much you can claim. How will the refund be paid? If you bought or built the property between 19 July 2016 and 31 December 2016, the refund will be paid directly to you. If you buy a new build after 1 January 2017, the refund will be paid to the contractor. If you self-build the property after 1 January 2017, the refund will be paid to the bank account of your loan provider.
What do you need to do before you apply?
Before you apply, you must be registered for either: myAccount, if you are an employee and pay tax through PAYE Revenue’s Online Service (ROS), if you are self-employed. Four year rule You may have signed your contract to buy a new build or drew down the first part of your mortgage for a self build between 1 January and 31 March 2017. If so, you may select the year of purchase to be the actual year you bought or built your home or the previous year provided you make your application before 31 May 2017. This will allow you to select the four year period which is of most benefit to you. For example, if your contract or draw-down date is 2 February 2017, you may choose whether that took place in either 2016 or 2017. If you choose 2016, this will allow you to use your Income Tax and DIRT for the four years from 2012 to 2015. If you choose 2017, you can use the years from 2013 to 2016.
How do you apply for Help to Buy (HTB)
Use myAccount or Revenue Online Service (ROS) to apply for HTB online. There are two stages to the online process: the application stage the claim stage. Application stage You can apply as an individual, or as part of a group if you are buying or building with other people. You must complete a declaration and select the years you want to use for a refund. If you are tax compliant, your application will be approved and you will be provided with an application number and a summary of the maximum amount you can claim. You will also be given an access code separately through MyEnquiries. Keep a safe note of both of these codes as you will need to provide them to your lender. If you are buying your home you will also need these codes for your qualifying contractor. If you are self-building you will need these codes for your solicitor. Your contractor or solicitor will require this information to verify what you have submitted. Claim stage Once you have signed the contract for your home, or drawn down the first part of the mortgage if you are self building, you can make your claim. Login to HTB through myAccount or Revenue Online Service (ROS) and complete the steps . If you are applying with other people you will also need to confirm the portion of the refund to be refunded to each person. If you are self-building, you will need to provide the BIC and IBAN of the loan bank account. Once you have submitted your claim you will be provided with a claim reference.
Once you have submitted your claim you should advise your developer or contractor (or solicitor if you are self-building). Provide them with your claim reference (issued to you after step 2) and access code (issued to you when you submitted your application). Before you receive any refund, the information you have provided will need to be verified by the: developer or contractor, in the case of a new build solicitor acting on your behalf, in the case of a self-build. The refund that you finally receive is limited to 5% of the purchase price of the house. This may mean that it is different to the maximum relief amount that you were given at application stage.