Source: Revenue Commissioners
The Help to Buy (HTB) incentive helps first-time buyers of newly-built homes to buy a new house or apartment. It also applies to once-off self-build homes. It only applies to properties costing €500,000 or less.
The Help to Buy incentive scheme gives a refund of income tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous 4 tax years.
Who can claim the Help to Buy (HTB) incentive?
To claim HTB, you must:
- be a first-time buyer
- buy or build a new property between 19 July 2016 and 31 December 2021
- live in the property as your main home for five years after you buy or build it
- be tax compliant, if you are self assessed you must also have tax clearance.
To qualify, you must not have previously bought or built a house or apartment, either on your own or jointly with any other person. If you are buying or building the new property with other people, they must also be first-time buyers. If you have inherited or been gifted a property it will not affect your eligibility.
If you are buying the property, you must have signed a contract to buy that property on or after 19 July 2016. If you are self-building, you must have drawn down the first part of the mortgage on or after that date.
If you are a first-time buyer who either buys or self-builds a new residential property between 19 July 2016 and 31 December 2021, you may be entitled to claim a refund of income tax and DIRT that you paid over the previous 4 tax years.
You cannot claim relief on PRSI or USC.
If you are buying (or self-building) the property with someone else, they must also be a first-time buyer. You will not qualify if you have previously bought or built a property, either individually or jointly with anyone else, even if you are now separated or divorced from that person.
The incentive only applies to properties that are bought or built as the first-time buyer’s home. It does not cover investment properties. Cash buyers do not qualify. If you have inherited or been gifted a property it will not affect your eligibility.
You must take out a mortgage of at least 70% of the purchase price (or, for a self-build, 70% of the valuation approved by the mortgage provider). This is known as the loan to value ratio. You are allowed to have a guarantor on the loan. A guarantor is someone who agrees to have the responsibility to pay your mortgage if you don’t or can’t pay it, for example, a parent or close relative.
With effect from 1 January 2017, the Help to Buy scheme only applies to properties costing €500,000 or less.
You must live in the property for 5 years from the date that it is habitable.
If you pay tax through PAYE
Before you apply for HTB, you must submit an Income tax Return for each year you wish to apply for a payment and pay any outstanding tax due. You must have a Tax Clearance Certificate if you were registered for another tax in any part of the refund years in which you are applying for.
Use myAccount to submit an Income Tax Return for the relevant years. Online Income Tax Returns are pre-populated with your pay and tax details.
In cases of retrospective applications, you can download the form and submit on paper. When you have completed this form, you can scan it and then upload it in MyEnquiries. To do this, you should:
- click ‘Add new enquiry’
- select ‘Help-To-Buy scheme’ from the dropdown options available under ‘My Enquiry relates to’
- select ‘Income tax return from the dropdown options available under ‘And more specifically’
- attach the scanned pages of your Income tax Return (Form 12)
- submit your enquiry.
If you are self-employed
If you are self-assessed, you must be fully tax compliant and have tax clearance. You must have filed your Income Tax returns and paid all the tax that you owe for any years where you were self-employed. Use Revenue Online Service (ROS) to submit your Form 11.
Four year rule
You may have signed your contract to buy a new build or draw down the first part of your mortgage for a self build between 1 January and 31 March 2021. If so, you may select either the:
- year of purchase to be the actual year you bought or built your home
- previous year provided you make your application before 31 May 2021.
This will allow you to select the four year period which is of most benefit to you.
If your contract or draw-down date is 2 February 2021, you may choose whether that took place in either 2020 or 2021.
If you choose 2020, this will allow you to use your Income Tax and DIRT for the four years from 2016 to 2019.
If you choose 2021, you can use the years from 2017 to 2020.
Selecting 2020 as a year
You may select 2020 as a year in your HTB application once you:
- have submitted your annual Income Tax Return for that year
- have received your Statement of Liability from Revenue with respect to that year.
The Statement of Liabilities is not issued until after your return has been submitted. An underpayment of tax in 2020 due to income received from the Pandemic Unemployment Payment or Temporary Wage Subsidy Scheme does not need to be paid in 2021. Revenue will collect the underpayments, interest free, by reducing your tax credits over 4 years starting in 2022.
Approved developers and contractors
The contractor you are purchasing your home from must be approved by Revenue. You can check the list of approved developers and contractors to make sure that your developer or contractor is approved.
Enhanced Help to Buy Scheme
Under the July Jobs Stimulus package, the maximum relief available was temporarily increased. In Budget 2021, this increase has been extended to the 31 December 2021.
If you sign a contract for a new house or draw down on a self-build mortgage between 23 July 2020 and 31 December 2021, you are eligible for the increased relief – called enhanced relief.
You can claim relief on the lesser of:
- 10% of the purchase price of the property
- 10% of the completion value of a self-build
- The amount of income tax and DIRT you paid for the previous 4 years
If you have already made an application under the original scheme, you may meet the enhanced requirements. You should cancel your original HTB application and reapply to avail of the increased relief.
You can read more about the Enhanced Help to Buy Scheme on Revenue.ie.
All other conditions of the scheme stay the same.
|Purchase price or valuation||1 January 2017 to 23 July 2020||23 July 2020 to 31 December 2021|
|Up to €500,000||Relief of up to 5% of purchase price or €20,000||Relief of up to 10% of purchase price or 10% of valuation price on completion or €30,000|
|Over €500,000||No relief||No relief|
How to apply
There are two stages to the online process:
- The application stage
- The claim stage.
If you are a PAYE employee only, you can apply for the Help to Buy incentive through Revenue’s myAccount service.
If you are a self-assessed taxpayer, you can apply through Revenue’s Online Service (ROS).
You will also need access to MyEnquiries, a secure method of corresponding with Revenue.
- If you are a ROS business user, you can access MyEnquiries from your My Services screen under ‘Other Services’
- If you are a PAYE employee only, you can access MyEnquiries through myAccount
You can get full details of the process from Revenue.
How do I get the refund?
- If you buy a new build after 1 January 2017, the refund is paid directly to the builder
- If you self-build the property after 1 January 2017, the refund is paid to a bank account you hold with your loan provider
Can Revenue claw back a refund?
Revenue can claw back refunds if:
- you were not entitled to the refund
- you do not live in the property for a minimum of five years
- you did not finish the process to buy the property
- you did not finish building the property.
Revenue can claw back refunds from the contractor if:
- the property is not bought by you within two years from when the refund was made to the contractor
- Revenue has reasonable grounds to believe that the property will not be bought by you within that two-year period.
There is some flexibility around the two-year period. This can apply if Revenue is satisfied that the property is either:
- almost complete at the end of the two years
- likely to be completed within a reasonable time period.
Once the residence is built and bought by you, you are solely responsible for meeting the conditions for the HTB refund. The developer is no longer responsible after this point.
You can also read Help-To-Buy-Scheme