Tuesday, 24 November 2020

Questions (258)

Michael Collins


258. Deputy Michael Collins asked the Minister for Finance if he will address a case (details supplied) regarding the help-to-buy scheme; and if he will make a statement on the matter. [38241/20]

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Written answers (Question to Finance)

The Help to Buy (HTB) incentive, is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous four years, subject to limits outlined in the legislation. Section 477C Taxes Consolidation Act 1997 (TCA) outlines the definitions and conditions that apply to the HTB scheme.

Revenue has advised that it understands the key facts as as follows:

- A parent gifted their child a house in 2016;

- The house was deemed unliveable by an engineer and had to be demolished (no date provided for when the house was demolished);

- The child has paid the Local Property Tax (LPT) on this house since 2013;

- The child applied for planning and a mortgage around 2018/2019.

Based on the facts outlined above, Revenue considers there are two key principal conditions that need to be considered:

1. Is the child a “first time purchaser” for the purposes of HTB scheme;

2. Is the property a “qualifying residence”.

Revenue further advise in relation to these issues:

Section 477C TCA provides a definition of a “first-time purchaser” for the purposes of the HTB scheme. A “first-time purchaser” is an individual who, at the time of making a claim under the scheme, has not, either individually or jointly with any other person, previously purchased or previously built, directly or indirectly, on his or her own behalf a dwelling.

In a case where an individual who received a gift of or inherited a house previously, the individual may still be considered a first-time buyer for the purposes of the HTB scheme subject to all other conditions being satisfied, on the basis that they have not previously purchased a dwelling, as the wording of the legislation provides.

Section 477C(2) TCA defines a ‘qualifying residence’. The legislation is very specific as to the definition of a qualifying residence. It must be a new building which was not, at any time, used or suitable for use as a dwelling. Renovation or refurbishment of old houses to either upgrade or reinstate them for habitation does not qualify for HTB. In the circumstances where the house was previously used as a dwelling but fully demolished and a new house built, then it is “new”.

For Revenue to make an assessment that the dwelling being built on the site is ‘new’, sufficient evidence is required which shows that the previous dwelling was demolished and replaced as opposed to being extended/refurbished. Revenue also require as much evidence as possible from the builder, engineer or other professionals working on the project, about the condition of the former dwelling which made it uninhabitable or unsound and required that it was demolished (and the extent of demolition involved). If there is any other information (photos, etc.) that’s relevant in helping Revenue understand that the property meets the criteria in the legislation, this should be included.

I am also advised by Revenue in relation to LPT that any property that is in use as, or that is suitable for use as, a dwelling house is chargeable to LPT. Therefore, the state of dereliction of a property is not relevant where the property is actually occupied as a dwelling house. However, a property that is derelict to such an extent that it is not suitable for occupation (or not actually occupied) is not taxable. For further details please see the Revenue website link www.revenue.ie/en/property/local-property-tax/is-your-property-liable-lpt/is-your-property-uninhabitable.aspx.

The payment of LPT on a property that was gifted to an individual would not prevent the individual from availing of the HTB scheme, where the individual satisfies all other conditions of the HTB scheme.

Given the limited details outlined by the Deputy in relation to this case, the applicant should contact Revenue via MyEnquiries outlining the specific facts and circumstances of their case and Revenue will consider whether the property would satisfy the conditions for the HTB scheme.