I am advised by Revenue that no tax rebates are available in the circumstances mentioned by the Deputy. The only residential property relief currently in operation which provides rebates of Income Tax is the Help to Buy (HTB) scheme. For an individual to obtain relief under the HTB scheme for a residential property he or she has built or bought, the property must be newly built with the construction cost subject to VAT in Ireland.
The HTB scheme is designed to provide income tax relief to assist first-time buyers with obtaining the deposit required to purchase or build their first home.
Broadly, the relief takes the form of a refund of income tax, including deposit interest retention tax (DIRT), paid over the 4 tax years prior to making an application for the refund. It is open to HTB claimants to select any or all of the previous 4 tax years for the purposes of calculating the HTB refund. The maximum refund is the lowest of –
- the total income tax and DIRT paid in the previous 4 years, or
- 5% of the purchase price, or valuation in the case of a self-build, up to a maximum of €500,000 (a €600,000 maximum applied where, in the period from 19 July 2016 to 31 December 2016, a contract for the purchase of a new house was entered into, or in the case of a self-build, the first tranche of a qualifying loan was drawn down by the claimant.
The HTB scheme provides for the registration of building contactors with Revenue for participation in the scheme and for claw-back of tax relief given in certain circumstances. The scheme applies where, in the period from 19 July 2016 to 31 December 2019, an individual enters into a contract with a qualifying contractor for the purchase of a qualifying residence or has drawn down the first tranche of a qualifying loan in respect of the individual’s self-build qualifying residence.
While the rebate of Income Tax may be paid, upon claim, after the date of signing of the contract or, in the case of a self-build property, after the first tranche of the mortgage is drawdown from the lender, there are a number of conditions under which a clawback of relief can arise. Revenue can claw back refunds if:
- the individual was not entitled to the refund,
- the individual does not live in the property for a minimum of 5 years,
- the individual did not finish the process to buy the property, or
- the individual did not finish building the property.
Additionally, Revenue can claw back refunds from the contractor if:
- the property is not bought by the individual within 2 years from when the refund was made to the contractor, or
- Revenue has reasonable grounds to believe that the property will not be bought by the individual within that 2-year period.
There is some flexibility around the 2-year period if Revenue is satisfied that the property is either almost complete at the end of the 2 years or likely to be completed within a reasonable time period.