Dáil Éireann Debate, Tuesday - 8 September 2020
277. Deputy Colm Burke asked the Minister for Finance the criteria for the help-to-buy scheme; the criteria in cases in which contracts predate the announcement of the new changes to the scheme; and if he will make a statement on the matter. [21151/20]
Amharc ar fhreagraThe 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 outlines the definitions and conditions that apply to the HTB scheme. A claimant under the scheme must make an application confirming he or she meets various conditions specified in the section, including that he or she is a first-time purchaser and has completed a tax return form and is tax compliant for each of the tax years for which a claim is being made. The obligations apply to each party, where there is more than one party to a claim.
The definition of “first-time purchaser” for the purposes of the scheme 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. The “qualifying residence” must be occupied as the sole or main residence of the first-time purchaser.
The Government recently announced a temporary enhancement to the existing HTB scheme for the remainder of 2020 as part of the July Stimulus plan. The legislation to give effect to this increase has been outlined in the Financial Provisions (Covid-19) (No.2) Act 2020 and was signed into law on 1 August 2020.
In summary, the legislation provides that where applicants
(i) enter into a contract for the purchase of a new house or apartment, or
(ii) make the first draw down of the mortgage in the case of a self-build property,
during the period from 23 July 2020 to 31 December 2020, they will 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 remains the same.
To the extent that the conditions outlined above for the enhanced HTB relief are not satisfied, the original HTB relief is still available, subject to satisfying the conditions.
If an applicant is purchasing a house (rather than self-building) and has entered into a contract to purchase his or her first home prior to 23 July 2020, he or she will not satisfy the conditions to avail of the temporary enhanced HTB relief. However, if an applicant is self-building a new home, and he or she draws down the first tranche of the mortgage between 23 July and 31 December 2020, then he or she may be able to avail of the temporary enhanced HTB relief.
I am advised by Revenue that it has published Tax and Duty Manual 15-01-46 on its website, which contains detailed guidance on all matters relating to HTB, including the temporary enhanced HTB scheme.
