Dáil Éireann Debate, Tuesday - 27 July 2021
451. Deputy Pearse Doherty asked the Minister for Finance the estimated revenue that would be generated in 2022 by restricting the amount an applicant can claim under the help to buy scheme from €30,000 to €20,000 and from 10% to 5% of the purchase price. [41360/21]
View answerThe Help to Buy (HTB) incentive was introduced in 2017. The measure is currently scheduled to expire on 31 December 2021. HTB 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. An increase in the supply of new housing remains a priority aim of Government policy. One of the main aims of the policy underpinning the design of HTB was to help encourage the building of additional new properties. By restricting the scheme solely to new dwellings and new self-builds, it is anticipated that the resulting increase in demand for new build homes will encourage the construction of an additional supply of such properties.
HTB was enhanced in July 2020 as part of the July Stimulus package last year and its duration was extended in Finance Act 2020. These developments were in line with the commitment in the Programme for Government regarding the measure. The following changes apply from the period from 23 July 2020 to the end of 2021:
Under the enhanced support, claimants may be eligible for increased relief under the HTB scheme to the lesser of:
- €30,000 (increased from €20,000),
- 10 per cent (increased from 5 per cent) of either the purchase price of the new home or, in the case of self builds, the completion value of the property, or,
- the amount of Income Tax and DIRT paid in the four years prior to making the application.
All other conditions of the original HTB scheme remain as before.
The following table sets out the estimated cost for each year of the scheme, including 2021 to 30 June:
|
Year |
Estimated Cost (€m) |
|
2021 (to 30 June) |
83.1 |
|
2020 |
126 |
|
2019 |
101.3 |
|
2018 |
73.2 |
|
2017 |
69.1 |
I am advised by Revenue that the estimated yield from the proposal outlined by the Deputy, based on data for 2020, is very roughly of the order of €50m. As the enhanced scheme only operated for a portion of 2020, the estimated yield provided to the Deputy is based on all claims in 2020, taking account of the property price, the tax paid and the cap on the maximum relief. Given the effects of COVID-19 on the property market, and the possibility of behavioural effects arising as a result of the proposed change, the figure should be viewed as tentative.
