Séamus McGrath
Question:567. Deputy Séamus McGrath asked the Minister for Finance to reinstate the home renovation incentive tax relief (details supplied). [18957/25]
View answerTuesday, 29 April 2025
Questions (567)
Written answers
As the Deputy will be aware, the Programme for Government (Securing Ireland's Future) sets out a range of commitments intended to make "Ireland’s buildings more sustainable and energy-efficient, reducing reliance on fossil fuels, and lowering energy costs for households. By promoting retrofitting, renewable heating, and solar energy, we aim to make homes warmer, cheaper to heat, and less reliant on fossil fuel". However, the reinstatement of the Home Renovation Incentive (HRI) is not amongst these.
The HRI provided tax relief by way of an income tax credit on repair, renovation or improvement works on principal private residences or rental properties carried out by tax compliant contractors. It was introduced in 2014 at a time when there was considerable loss of employment within the construction sector, with the aim of addressing this market failure by stimulating increased activity in the sector.
The HRI expired on 31 December 2018 following a review of the scheme.
Further, in 2019, in the context of Tax Strategy Group (TSG) deliberations, my Department examined the concept of a tax incentive along the lines of the HRI for domestic retrofit projects. The relevant TSG paper was published with the Budget 2020 documentation. It indicated that there could be a duplication of supports with the direct Sustainable Energy Authority of Ireland (SEAI) grant system already in place and that a scheme such as this could conflict with the need to increase overall housing supply.
The paper observed that:
• In terms of current direct expenditure measures in the energy efficiency sector, the Government continues to make grants available to householders who wish to improve the energy efficiency of their home;
• Research undertaken by the ESRI into householder preferences regarding retrofit subsidy schemes found that households strongly prefer cash payment subsidies (i.e. up-front discounts or cash back post works) versus other indirect methods of financial support such as tax credits); and
• From an equity perspective, tax expenditure measures can be regressive by nature, given that only those who pay taxes qualify, and those with greatest income benefit the most. As such, a tax incentive measure as proposed may be of little benefit to certain groups who are most likely to suffer from energy poverty, for example the elderly or those on limited incomes.
It is my view that these observations still hold true.
More generally, proposals for tax expenditure measures are assessed in accordance with my Department's Tax Expenditure Guidelines. These make clear that it is important that any policy proposal which involves tax expenditures should only occur in limited circumstances where there are demonstrable market failures. In particular, they provide that a tax-based incentive should only be considered where it would be more efficient than a direct expenditure intervention.
At present, I have no plans to reinstate the HRI.