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.

Crowleys DFK are currently running a series of CPD accredited VAT on Property briefings for solicitors in Cork and Dublin. The purpose of the seminars, presented by Tax Partner Siobhán O’Hea, is to raise awareness of common VAT pitfalls in property transactions.

VAT on property can be a complicated area but it is vital to thoroughly investigate the potential VAT impact before embarking on any property transaction, Siobhán advises.

“We are seeing problems crop up in many different situations. For example, more people have got involved in letting property in recent years and this is an area where VAT issues can often arise. While lettings are exempt from VAT, landlords can opt to tax the letting and charge 23% VAT on the rent. This can be advantageous if the landlord wants to claim repayment of VAT incurred on the acquisition or development of the property, however it is important to be aware that there are restrictions. For example, you cannot opt to tax the letting if the property is occupied for residential purposes or occupied by the landlord or a person connected with the landlord.

“On sales of commercial property, liability to VAT depends on whether the property is considered ‘new’. There are Revenue rules governing the definition of ‘new’ for property VAT purposes. Generally, the supply of older properties is exempt from VAT however, in some circumstances, the vendor and purchaser may jointly opt to have the transaction subject to VAT.

“Where property is supplied in connection with an agreement to develop the property, these transactions are always taxable.

“In our experience, there are VAT pitfalls in many every day property transactions and these can prove very costly for clients. This is why Crowleys DFK are running these seminars for solicitors. It’s an opportunity to raise awareness and to help ensure common mistakes are avoided,” Siobhán concluded.

For further information on Crowleys DFK VAT briefings, please get in touch.

Talk to us

Siobhán O’Hea
Partner, Tax Services
siobhán.ohea@blacknighthosting.com

Many companies fail to realise that their Research and Development activities could qualify for valuable tax incentives, explains Edward Murphy, Partner and Head of Tax Services.

Ireland has a well established reputation as a friendly environment for innovative businesses. Government strategy, set out in Innovation 2020, is to nurture excellent research in strategically important areas that benefit the economy and society. A key ambition is to increase investment in research and development and, to this end, Government works with, and funds, various programmes through agencies such as Enterprise Ireland, Science Foundation Ireland, IDA Ireland, InterTrade Ireland and the Higher Education Authority. In addition, research and development tax incentives are available to help develop business and attract high quality jobs. Two of the most important of these incentives are the Research & Development Tax Credit regime and the Knowledge Development Box.

R&D Tax Credit

If your company spends money on research and development activities, you may qualify for a Research and Development (R&D) Tax Credit. This scheme is administered by the Irish Revenue Commissioners and is open to companies who are liable to Irish tax and carrying out qualifying R&D activity in Ireland and/or the European Economic Area (EEA).

The credit is calculated at 25% of qualifying expenditure and is used to reduce your company’s liability to Corporation Tax.

If you have insufficient Corporation Tax against which to claim the R&D tax credit in a given accounting period, the credit may be set against the Corporation Tax for the preceding period. It can also be carried forward indefinitely or, if your company is a member of a group, it can be allocated to other group members.

In some circumstances, the R&D credit can also be claimed as a payable credit.

Qualifying research and development activities must meet certain conditions, such as:

  • involve systemic, investigative or experimental activities
  • be in the field of science or technology
  • involve basic research and/or applied research and/or experimental development
  • seek to make scientific or technological advancement
  • involve the resolution of scientific or technological uncertainty.

To claim the R&D tax credit, it is not necessary to hold the intellectual property rights resulting from the R&D work. It is also not necessary for the R&D work to be successful. The credit is claimed using the Revenue Online Service (ROS). However, before submitting a claim it is important to check that you meet the requirements and have all the necessary supporting documentation. While this may appear onerous, a good tax advisor can guide you through the process. Paying attention to detail when submitting your claim can help avoid Revenue queries and/or a Revenue audit.

Knowledge Development Box

The Knowledge Development Box (KDB) is a tax relief which reduces the Corporation Tax payable on a company’s income from qualifying patents, computer programmes and, for smaller companies, certain other certified intellectual property (IP). Ireland’s KDB was the first IP regime to be fully compliant with new international tax standards and ranks favourably with similar schemes in other countries.

If your company qualifies for the KDB regime, you can avail of a deduction equal to 50 percent of your qualifying profits. In effect, this reduces the normal Corporation Tax rate of 12.5 percent to 6.25 percent on qualifying profits.

For KDB purposes, qualifying assets are those created from R&D activities such as:

  • a computer programme
  • an invention protected by a qualifying patent
  • IP for small companies which is certified by the Controller of Patents as patentable, but not patented.

Marketing related IP such as trademarks, brands, image rights and other intellectual property used to market goods or services are not considered to be qualifying assets.

To apply for the KDB, you must submit your claim on your Corporation Tax return via the Revenue Online Service (ROS). As with R&D tax credits, before submitting a claim it is important to check that you meet the requirements and have all the necessary supporting documentation.

Conclusion

Companies sometimes mistakenly believe that they are not engaged in research and development because they do no operate in industries such as pharma or technology. However, in many instances, companies in other sectors such as manufacturing, energy, financial services, agribusiness, food and drink, are eligible for R&D tax credits and/or the Knowledge Development Box. While navigating the conditions attached to submitting a claim can appear daunting, these are valuable incentives both for indigenous Irish SMEs and for multinationals and are therefore well worth considering.

Talk to us

Edward Murphy
Partner and Head of Tax Services
edward.murphy@crowleysdfk.ie