The Help to Buy (HTB) incentive is a scheme to help first time property buyers. It helps with the deposit needed to buy or build a new house or apartment. In order to claim the HTB scheme, you must:

  • Be a first-time buyer
  • Take out a mortgage that is at least 70% of the purchase value of the property
  • Be tax compliant
  • Live in the property for a minimum of 5 years after purchase

To qualify, you must have not bought or built a house or apartment previously on your own or jointly with any other person. You will still qualify for HTB if you have previously inherited or have been gifted a property.

The HTB scheme is back dated to include homes bought from 19 July 2016 and will be available to 31 December 2019. If the property was purchased between 19 July 2016 and 31 December 2016, the price of the property must be €600,000 or less. If the property is bought between 1 January 2017 and 31 December 2019, the property must cost €500,000 or less.

The amount you can claim is the lessor of the following:

  • €20,000
  • 5% of the purchase price of the new home.
  • The amount of Income Tax and Deposit Interest Retention Tax (DIRT) you have paid in the previous 4 tax years.

Regardless of the amount of people who enter into the contract to buy or build the property, the cap of €20,000 applies. Universal Service Charge (USC) and Pay related Social Insurance (PRSI) are not considered when calculating the amount you are entitled to claim.

If you purchased or built the property between 19 July 2016 and 31 December 2016, the refund will be issued directly to you. If you buy a new build between 1 January 2017 and 31 December 2019, the refund will be issued to your contractor. The contractor must be approved by Revenue. If you self-build, the refund is paid to a bank account held with your mortgage provider.

Revenue may clawback the refund if:

  • You do not live in the property for 5 years
  • You do not complete the process to buy the house
  • You were not entitled to the refund
  • The property is not completed

Once the property is built or bought, you have the sole responsibility of complying with the conditions for the HTB refund.

If you require any assistance with HTB or  further details on the above, please contact us.

A recent High Court decision has a significant bearing on the application of dwelling house exemption to beneficiaries who inherit a mixed asset estate, comprising of a number of residential properties.

The dwelling house exemption allows someone to inherit a property tax-free provided that they have lived in it for three years before the homeowner’s death and that it was the main home of the person who has died. Critically, if a person owns even a share in another property “at the date of inheritance”, they lose their entitlement to the relief. Revenue has always been of the view that if someone who would otherwise qualify for dwelling house relief inherits not just the main home of the disponer but another property, or a share in another property, they no longer meet the eligibility criteria.

A Court ruling on 25th September 2018 has changed the rules on dwelling house exemption. The High Court ruled in the case of a successor, who inherited both the family home where the successor had lived with the disponer and an interest in four other properties, was entitled to the dwelling house exemption. The judge held that the successor did not have a beneficial interest in either of the dwelling houses at the date of the inheritance, as a successor cannot become beneficially entitled to a house which forms part of the residue of an estate until the assets available for distribution have been ascertained.

The impact of the Court case is that you will no longer be disbarred from dwelling house relief if you inherit property other than the family home in the same will. Revenue has now adopted a revised approach in distinguishing between dwelling houses inherited as a specific legacy and those inherited in the residue of an estate.

Accordingly, a dwelling house forming part of the residue of an estate is not to be taken into account in determining whether a successor has an interest in another dwelling house at the date of an inheritance. Ownership of property received as part of the residue of a will would occur at a later date than “at the date of inheritance”.

Anyone receiving a specific legacy of an interest in a property as well as receiving the family home will continue to be excluded. This is because, as a specific legacy, beneficial ownership of the “other” property would transfer at the same time as the family home.

Revenue acknowledged that if any taxpayers find themselves in a similar set of facts as this case then they may be entitled to a refund of the tax paid, bearing in the mind the four year limit that applies to refunds of tax.

Should you require any further details on the dwelling house exemption, please contact us.