Help to Buy Scheme Updates


The Help to Buy Scheme or “HTB” Scheme allows
first-time buyers in Ireland to claim a tax rebate up to 5% of the value of a new home they are buying.

Update – July 2020 . As part of the government’s July Stimulus package –  the current HTB limit of 5% or €20,000 is being increased to 10% or €30,000.  This increase is only a temporary measure until the end of 2020. The start date of the increased amount is from July 23rd . Applications for the enhanced HTB rates can be made from August.
If you have already submitted an HTB application under the original HTB scheme you can cancel the original application and reapply to avail of the increased relief.


The Help to Buy tax rebate is available only to first-time buyers to help them purchase a new home in Ireland. The home must be purchased from a “qualifying contractor” .
The scheme is aimed at people who might not be able to afford to put down a 10% deposit in line with Central Bank Mortgage Rules.

The Help to Buy scheme is due to finish at the end of 2021.


Help To Buy Details:

The government’s  Help to Buy Scheme  (HTB)  enables eligible first-time buyers to get up to 5% (10% between July and December 2020) of the purchase price of a new house or apartment back in the form of a tax rebate.  The payment must be used towards the deposit on a qualifying house purchase.

Limited to Tax Paid in Last 4 Years

The maximum tax rebate available under Help to Buy is limited to the total income tax and DIRT paid in the previous four tax years.

The amount is capped at €20k. (€30k from July 2020 to Dec 2020).
If you have paid less than €20k (€30k) income tax / DIRT  in the past 4 years then the maximum rebate possible will be the total amount of tax you paid.


Examples of Maximum HTB Amounts

Purchase
Price
Max Rebate (20%)Max Rebate (30%)
(July to Dec 2020)
200,00010,00020,000
250,00012,50025,000
350,00017,50030,000
400,00020,00030,000
450,00020,00030,000

HTB Worked Example

Using Revised Figures from July to Dec 2020

A joint application .
Applicant 1 – Salary €47000 . Income tax paid in past 4 years = €25000
Applicant 2 Salary €33000. Income tax paid in the last 4 years = €12000
They have paid a total of €37000 Income Tax in the last 4 years and therefore will be eligible for the maximum €30000 Help to Buy.

House Price €400,000
Help to Buy amount €30,000
Mortgage: – based on 3.5 times joint salary they could borrow €280,000.
This meets the Help to Buy rule on minimum Mortgage LTV allowed (70%) (70% of €400k = €280,000)
This means a deposit of €120k will be required
The Help to Buy contribution of €30k leaves them needing an extra €90k for the deposit.

Note : –
It might be possible to get an exemption on the salary limit from their mortgage lender. In that case, a mortgage of €320,000 could be possible. (4 times earnings).
If the buyers did get a €320k mortgage they would need to contribute €50k for the deposit on top of the €30k from Help to Buy.

Cashback from Banks :

In the above example , if the house buyers went for one of the 2% cashback mortgages they would also get €6400 cashback from the lender. That would come in handy for buying furniture etc.

If first-time buyers using Help To Buy also manage to get one of the cashback mortgages – such as with Bank of Ireland , they could end up with as much as 12% total cashback.

See our lists of the Lowest Mortgage Rates Here

See How much you Can Borrow



Applications for Help to Buy Scheme

Important : Before making an application for the Help to Buy Scheme , you must first complete Online Forms 12 (if a PAYE taxpayer) OR Forms 11 (if self-assessed), in respect of each of the four tax years and you must pay any outstanding taxes due.

Applicants will also need to register for Revenue’s MyEnquiries service.

There are 2 stages to the  HTB Application :
Stage 1 is to work out the maximum relief available to you under the scheme based on the income tax payments you made in the relevant years.  House buyers can apply to Revenue for the HTB scheme before choosing a house or applying for a mortgage. Once you know the maximum HTB amount possible –  you can then arrange a mortgage or sign a contract with a Qualifying Contractor.

When mortgages and contracts are signed you will need to complete Stage 2 of the Help to Buy Claim . At this stage Revenu will calculate the exact rebate based on the purchase price.

Online applications for the Help to Buy scheme
PAYE employees can apply on Revenue’s MyAccount .
Self Assessed taxpayers can apply through ROS

All the HTB payments by Revenue will be paid directly to the builder/developer as part of the deposit.  The builder/developer must have registered with Revenue as a registered contractor under the Help to Buy Scheme .
Only properties built by a registered contractor will be eligible.

In the case of a self build – the payment will be made direct to the bank providing the mortgage.


Mortgage Rules

In order to qualify for HTB , 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 is to avoid helping people who have a deposit big enough to cover 20% or more of the house price.


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, or built a property.”

That means owning an inherited property will not exclude people from this scheme.


Clawback of Help to Buy

The property purchased with Help to Buy must be occupied by the buyer, or at least one of the 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.


First Time Buyers Grant

The HTB scheme is sometimes called the “First Time Buyers Grant” .

There was a “First Time Buyers Grant” in operation from 1977 to 2002. When it was finally 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?  Will the HTB scheme  just result in a rise in house prices ?


First Time Buyers in Ireland can also apply for low-interest rate mortgages from local authorities. Read more here about these Rebuilding Ireland Home Loans. 
It seems that it is possible to use both the Help to Buy Scheme and the Rebuilding Ireland Home Loan. We have not seen anything to say otherwise.