Rachael Mc Cormack from our property team answers the the most commonly asked questions in respect of the help to buy scheme
What is the scheme and why was it created?
The Help to Buy Scheme was firstly set up by the Irish Government in 2017 to allow first time home buyers to get their foot onto the property ladder. It’s designed to help first time buyers raise their contractual deposit needed to either purchase or build a new home. The tax incentive works in a way of a tax refund of Income Tax and Deposit Interest Retention Tax over the last 4 years which can result in a refund of up to €30,000.00. This scheme has now been extended until 31 December 2024.
Who is eligible?
For a person to qualify for this tax incentive, they are required to be a first time buyer who is either buying or building a new home up to the value of €500,000.00. If you are buying with another person, they too must be considered as a first-time buyer. The initiative is only applicable to new built homes, it does not apply to second hand homes, buy to let properties or renovated properties.
How to apply?
When applying for the Help to Buy Scheme there is two stages;
The Application Stage (Preliminary stage)
A person must be tax compliant in order to apply for this tax incentive. A person would apply through their “my account” with revenue, they can apply as an individual or as part of a group if buying with another person. If revenue confirms that the applicant has been tax compliant, they are given an application number, a summary of the maximum amount they can receive and an access code.
The Claim Stage
A valid claim must be submitted before the applications expires, otherwise an application would have to be resubmitted. If an application was submitted between the dates of 1st January and 30th September, it would expire on the 31st December of the same year, if the application was submitted on the 1st October and 31st December it would expire on 31st March of the following year. Once the applicant’s contract for sale and loan offer has been signed it is then required to be uploaded to their claim application. Revenue then provides the applicant with a claim reference and access code which is required to be provided to the Developer and their Solicitor in order to obtain the tax refund which would represent the remaining contractual deposit.
Can you use a Mortgage with the HTB?
Yes, a person who is eligible for the scheme may use the assistance of finance with the Help to Buy Scheme. It is important to note that Revenue has a requirement in place to be complied before a person can make a successful claim under the initiative being that the person must take out a mortgage of at least 70% of the purchase price. Revenue will provide an application number and access code once your application has been accepted which will be needed to be provided to your lending institution.
How is the Tax refund received?
Once the application stage has been completed, the applicant is then sent for verification. This process involves the Developer if purchasing a new build or the applicants Solicitors if building a new home to verify the sale. Once the claim has been verified the tax refund is provided to either the Developer in circumstances of purchasing a new build property or the applicants solicitor in circumstances where the applicant is building their home.
*Please note that the content of this blog does not amount to professional advice. Legal advice should be sought in respect of specific queries. This update is provided on the basis of information available as at February 2023. For further information, please contact Rachael McCormack/Lisa McKenna or any member of the McKenna & Co Property Team.