Tax Relief on Home Renovation – Some Details

A new Home Renovation Incentive Scheme  was announced in Budget 2014.

This is a tax relief scheme which will run from 25th October 2013 to 31st December 2018.  (It was originally supposed to start in Jan 2014 but was bought forward to stop owners delaying work starting)  .
The Scheme will allow homeowners to claim tax relief by way of a tax credit at 13.5% of qualifying expenditure on any repair, renovation or improvement work carried out on a principal private residence.
Update : –  scheme extened to rented property – see  http://www.moneyguideireland.com/home-renovation-tax-relief-scheme.html

Qualifying expenditure is any expenditure subject to the 13.5% VAT rate.

This is an extract of Revenue’s list of  private housing related services/goods that qualify for 13.5% VAT

Services consisting of the development of immovable goods, being private dwellings, and work on such immovable goods including the installation of fixtures, where the value of movable goods (if any) provided in pursuance of an agreement in relation to such services does not exceed two-thirds of the total amount on which tax is chargeable in respect of the agreement.”

So in the vast majority of renovation jobs – all labour and goods should be rated at 13.5% VAT and be classed as qualifying expenditure.

The work must cost a minimum of €5,000 (exclusive of VAT) which would attract a credit of €675. Where the cost of the work exceeds €30,000 (exclusive of VAT), a maximum credit of €4,050 will apply.

Note:  If work is grant aided  the qualifying expenditure will be reduced by three times the amount of the grant payment .
The tax credit will be  given over the two years following the year in which the work is carried out. In the case of joint ownership – the maximum tax credit applies to the Property but Homeowners can opt to split the tax credit between the owners based on qualifying expenditure incurred by each owner.

The work must commence on or after 25th October 2013 and be carried out before  Dec 2018. Homeowners must be LPT compliant in order to qualify under the Scheme while building contractors must be tax compliant in order to carry out works. The Scheme will be administered through Revenue’s online systems.
The valuation of your Property for LPT purposes proveded in  May 2013 will stay the same for 2013, 2014, 2015 and 2016 no matter what improvements you make to your Property. The next valuation for LPT is in 2019.

It is hoped this scheme will help the construction trade and discourage people from using the “black market” to get work done.

They type of work that is covered includes : Extensions, garages, attic conversions, supply and fitting of kitchens, bathrooms and built in wardrobes, water treatment units, landscaping, window fitting, plumbing, tiling, rewiring and plastering.

One thought on “Tax Relief on Home Renovation – Some Details

  1. “The Scheme will allow homeowners to claim tax relief by way of a tax credit at 13.5%…”
    Ultimately no relief will be obtained by the homeowner because the builder will the jack up the price quoted for the renovation. This happens whenever tax relief is claimed by the purchaser of a service or product. The scheme may benefit the construction industry but will not benefit the house owner.

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