The Help-to-Buy Scheme

The Help-to-Buy scheme is a Government tax refund scheme designed to help first-time buyers get the deposit needed to buy a newly built home. As part of the Government’s July 2020 Stimulus package, a temporary enhanced Help-to-Buy scheme was introduced. First-time buyers can now claim a tax rebate of up to €30,000 for the purchase price of a new-build house or apartment between now and 31 December 2020. This is an increase from €20,000 when the scheme first came into effect in January 2017.

Who can claim the Help-to-Buy scheme?

Any first-time buyer of a newly built home can apply for a tax refund under the Help-to-Buy scheme. However, to qualify as a first-time buyer under the scheme, you must not have previously bought or built a house or apartment either on your own or jointly with another person. If you are buying a home jointly, and one applicant is a first-time buyer and another applicant is not, you are ineligible for the grant.

What is the criterion to apply for the enhanced Help-to-Buy scheme?

During the period from 23 July 2020 to 31 December 2020, applicants will be eligible for the increased relief if they:

• Sign a contract for the purchase of a new house, or
• Make the first draw down of the mortgage in the case of a self-build property.

If you have already applied for the original Help-to-Buy scheme but haven’t signed contracts or drawn down any part of the mortgage in the case of self-builds, you can cancel your original application and reapply under the new rate.

However, if you have already signed contracts for your new home, or have drawn down part of your self-build mortgage, prior to 23 July 2020, you will not satisfy the conditions for the increased relief. You can still avail of the lower rate nevertheless.

How much can I claim under the enhanced Help-to-Buy scheme?

The maximum tax refund is now 10% of the value of the property or of the completion value of the property in the case of self-builds, or €30,000, whichever is the lower. The rebate is only available on properties valued at €500,000 or less. This means that if you purchase a property for €300,000, you can claim the maximum rebate of €30,000. But if you buy a house for €400,000, the relief will be capped at €30,000.

What types of properties are included in the Help-to-Buy scheme?

The property must be a new build, and it must be bought or built as the first-time buyer’s home. It must be a new building which was not, at any time, used or suitable for use as a dwelling. Renovation or refurbishment of old houses to either upgrade or reinstate them for habitation does not qualify for the Help-to-Buy scheme. However, if the property was non-residential, but has been converted for residential use, it may qualify.

Are there any other caveats or conditions?

Yes, below are some important points to consider.

• You must have been fully tax compliant in the four years previous to making a claim. You will need to complete a Form 12 (for PAYE workers) and Form 11 (for the self-employed) in respect of each of the four years. You must also pay any outstanding taxes that are due.

• The Help-to-Buy Scheme is for owner-occupiers only. You cannot apply as an investor or landlord.

• You must use the property as your principal private place of residence for a period of five years. Clawback provisions apply.

• The purpose of the Help-to-Buy scheme is to assist first-time buyers getting the deposit necessary to buy a home. Therefore, you must take out a mortgage on the property with a qualifying lender. This loan must be used for buying or building the property only. The loan must be at least 70% of the purchase value of the property.

For further information on the scheme, please contact any member of our property team or your usual Reddy Charlton contact on 01 661 9500 or email solutions@reddycharlton.ie