As the Deputy will be aware, the Home Renovation Incentive (HRI) was introduced in Budget 2014 and will run until the end of December this year. The incentive provides tax relief for homeowners by way of a tax credit at 13.5% of qualifying expenditure incurred on repair, renovation or improvement work carried out on a principal private residence. In the recent Budget I extended the scheme to include rental properties, whose owners are subject to income tax.
Qualifying expenditure is expenditure subject to the 13.5% VAT rate. The work must cost a minimum of €4,405 (exclusive of VAT) which would attract a credit of €595. Where the cost of the work exceeds €30,000 (exclusive of VAT) a maximum credit of €4,050 will apply. The credit is payable over the two years following the year in which the work is carried out.
The tax credit is only available to the homeowner and not to children or other individuals who may fund the works. However, as the Deputy has mentioned, a Housing Adaptation Grant for People with a Disability is available from local authorities. This scheme provides grant aid to applicants to assist in the carrying out of works that are reasonably necessary for the purposes of rendering a house more suitable for the accommodation needs of a person with a disability. The grant can assist with changes and adaptations to a home such as making it wheelchair accessible, extending it to create more space, adding a ground floor bathroom or toilet or installing a stair lift. This grant, which is means tested, can cover up to 95% of the cost of works carried out, which is far more generous than the relief available under the Home Renovation Incentive.
Works which are grant-aided also qualify for the Home Renovation Incentive. Three times the value of the grant is deducted from overall expenditure, with any remainder attracting the tax credit of 13.5%. This is to align with best fiscal practice in that relief is not provided twice for the same expenditure. It is worth noting that the deduction in respect of grant-aided work is not taken into consideration for the purposes of reaching the minimum spend threshold of €4,405, excluding VAT.
My understanding is that applications for housing adaptation grants from local authorities are prioritised based on medical need. Therefore the grant scheme is highly targeted.
Given the existing supports available, particularly for those on low incomes, through their access to the grant scheme, I am not predisposed to expanding the tax relief available under HRI for works that are funded by family members.
