Help to Buy Scheme for First Time Buyers
Updated 20th October
First time buyers will be able to claim a tax rebate equal to 5% of the value of the house they are buying from January 2017.
A tax rebate of up to €20,000 will be available to first time buyers to help them purchase a new home in Ireland. It is aimed at people who might not be able to afford to put down a big enough deposit in line with Central Bank Mortgage Rules.
(The rebate can be claimed on new homes bought since July 19th 2016 – see below for further details.)
A few details of the scheme were announced in Budget 2017 on October 11th 2016. A lot more detail was contained in the Finance Bill on 20th October – (which has yet to be passed into law). We have updated this article to reflect any new information contained in the Finance Bill.
This help to buy scheme will allow first time buyers to get up to 5% of the purchase price of a new house back in the form of a tax rebate. (A New house means one that has not been occupied previously). The total tax rebate will be limited to the total income tax and DIRT paid over the previous four tax years and will be capped at €20k. If you have paid less than €20k income tax / DIRT in the past 4 years – the maximum rebate possible will be the amount of tax you paid.
Applicants for this Help to Buy Incentive will need to have completed Online Forms 12 (if a PAYE taxpayer) OR Forms 11 (if self-assessed), in respect of each of those four years and they must pay any outstanding taxes due.
The 5% will only apply to houses priced up to €400,000. Initial plans were that buyers will still be eligible for a tax rebate on property purchases up to €600,000 – but the rebate will be limited to €20,000. This upper limit may not be agreed by the Dail.
No rebate will be available on houses priced over €600,000
The rebate applies to NEW homes only (Including self build)
In order to qualify, applicants must take out a mortgage of at least 70% of the purchase price, or in the case of a self -build, at least 70% of the valuation approved by the mortgage provider.
This help to buy scheme will be open to people who signed contracts to purchase their first home on or after 19 July 2016. In the case of a self -build, applicants who drew down the first tranche of their mortgage on or after 19 July 2016 will also be eligible. The scheme is not available for buy-to-let properties.
Applications for the Help to Buy scheme are not going to be accepted by Revenue until January 2017. The Help to Buy scheme is due to run until the end of 2019
First Time Buyer – definition . Revenue say that “The first-time buyer must not have either individually or jointly with any other person (directly or indirectly), previously purchased, orbuilt a property.”
So – owning an inherited property will not exclude people from this scheme.
Clawback: The property must be occupied by the first-time buyer, or at least one of the first-time buyers in the case of multiple first-time buyers , for a period of five years from the date the property is habitable — otherwise some or all of the rebate will have to be repaid. See Below …
Leave or sell within 1 year – 100% of rebate to be repaid.
Leave or sell within 2 years – 80% of rebate to be repaid.
Leave or sell within 3 years – 60% of rebate to be repaid.
Leave or sell within 4 years – 40% of rebate to be repaid.
Leave or sell within 5 years – 20% of rebate to be repaid.
Examples of Rebate Amounts
Purchase Price Max Tax Rebate
Previous First Time Buyers Grants
There was a First Time Buyers Grant in operation from 1977 to 2002. When it was abolished it was worth €3,610 .
The Housing Minister at the time said the grant “returned little benefit to consumers” and had “simply been absorbed in the increased profits of builders” .
We wonder if the same thing will happen this time around?