What is the Help To Buy Scheme
The Help to Buy (HTB) Scheme aids first-time purchasers in purchasing a home or apartment that has just been constructed. It also holds for unique self-built residences. It only applies to homes that cost less than €500,000.
The income tax and Deposit Interest Retention Tax (DIRT) you paid in Ireland over the preceding four tax years are refunded under the Help to Buy Scheme.
In July 2020, the HTB Scheme was enhanced. The Enhanced Help to Buy Scheme is the name given to this increment. The Extended Help to Buy Program is open until December 31, 2024.
Who Qualifies For The Help To Buy Scheme
First Time Buyer
You may be eligible to get a refund of the income tax and DIRT that you paid over the preceding four tax years if you are a first-time buyer who purchases or self-builds a new residential property between 19 July 2016 and 31 December 2024. You cannot request relief under the USC or PRSI.
If you are purchasing the house (or developing it yourself) together with another person, they too must be a first-time purchaser. Even if you are currently separated or divorced from that person, if you previously purchased or constructed a property, either alone or jointly with anyone else, you will not be eligible. If you’ve owned a house abroad, you won’t be eligible.
The program only applies to homes that are purchased or constructed specifically for first-time buyers. For properties used as investments, it is not offered. Cash purchasers are not eligible. Your eligibility will not be impacted by whether you inherited or received a gift of real estate.
Mortgage
You must obtain a loan covering at least 70% of:
- The cost of the property if you’re buying a newly constructed home. A purchase cannot be made for less than its market value.
- The appraisal that the mortgage company has authorised if you are building a house
The loan-to-value ratio is referred to as this.
When determining the loan-to-value ratio for the HTB Scheme, shared equity programs like the First Home Scheme are not taken into consideration if you are receiving assistance with your home purchase through one of these programs. Only your mortgage balance is taken into account. You will not be eligible for HTB, for instance, if you are purchasing a house for €365,000, have been authorised for a mortgage of €224,000, and have equity funding of €73,000 in the property. Your LTV is 61% based on your mortgage because the equity funding is not taken into consideration when determining the LTV. This indicates that you are not eligible for HTB since you have not met the minimum LTV requirement of 70%.
On the loan, you are permitted to have a guarantor. A guarantor is someone who promises to take on the burden of paying your mortgage if you are unable to do so, such as a parent or close family member.
New Home
You must purchase or construct a brand-new residential property. It must not have previously been utilised as a residential property or be appropriate for such usage. The property can be eligible for HTB if it was formerly used for non-residential purposes but has now been transformed.
A brand-new house must cost no more than €500,000.
The approved worth of your home must be €500,000 or less if you are building it. Your mortgage company has given its approval to the self-built home’s valuation. It reflects the property’s value at the moment the mortgage is signed and takes the site’s cost into account.
5 years must pass after the property becomes habitable before you can move out. If you do not reside there for five years, you will be required to repay the HTB cost. Depending on how long you resided in the house, you may have to repay a certain amount. Additionally, there are several exclusions from this criterion. You won’t be required to pay back the HTB, for instance, if you purchased the home with another first-time buyer and you decide to move out but they decide to stay for another five years. Additionally, there is an exemption if your job requires a temporary move. The Help to Buy guidance from Revenue has more information on this.
The builder or developer from whom you purchase your new home must have Revenue’s approval. You will require a lawyer (registered with Revenue as an “HTB approver”) to certify your HTB claim if you are building your own home.
Tax obligations
You must register for Revenue’s online myAccount service if you pay taxes through PAYE. Self-assessed taxpayers are required to register for the ROS, or Revenue Online Service.
You must have paid all taxes owed for the four years preceding your claim in full in all circumstances.
For each of those 4 years, you must submit online Forms 12 (PAYE) and 11 (self-assessed) if you haven’t already. Any unpaid taxes are also your responsibility.
Rates
Enhanced Help to Buy Program
On July 23, 2020, the maximum relief allowed was momentarily increased. This increment was extended in later budgets, and it is now valid through the end of 2024.
You are eligible for higher relief if you enter into a contract to buy a new home or take out a self-build mortgage between 23 July 2020 and 31 December 2024.
You may request relief from the greater of:
- €30,000
- 10% of the cost of a new construction property
- 10% of a self-built property’s approved value
- The four-year average of your income tax and DIRT payments
Under the expanded relief, the maximum payout is €30,000 per qualified property. No matter how many parties sign a contract to buy the property, this cap still stands.
On Revenue.ie, you may find out more information regarding the Enhanced Help to Buy Scheme.
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 2024 |
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 approved valuation, or €30,000 |
Over €500,000 | No relief | No relief |
Applying
The online application process has three steps:
- The phase of the application
- Claiming stage
- The checking phase
Applying stage
You can use Revenue’s myAccount tool to apply for the Help to Buy Scheme if you are solely a PAYE employee.
You can submit an application using Revenue’s Online Service (ROS) if you are a self-assessed taxpayer.
Access to MyEnquiries, a safe way to communicate with Revenue, is also required.
If you are a ROS business user, go to the ‘Other Services’ section of your My Services screen to see MyEnquiries.
Through myAccount, you can access MyEnquiries if you are simply a PAYE employee.
Your application will be approved and you will be given a summary of the maximum amount you can claim if you are tax compliant.
Claiming phase
You can submit a claim through ROS or MyAccount when your application has been approved. At this point, you will need to validate information about the property and present documentation related to your mortgage.
Level of verification
An authorised verifier has validated the data you’ve supplied. If you are purchasing a new home, this is the contractor; if you are building your own home, this is your solicitor.
Revenue is the best source for all information.
How do I get the refund?
If you buy a new build, the refund is paid directly to the builder. If you self-build the property, the refund is paid to a bank account you hold with your loan provider.
