July Stimulus Package – Help to Buy Update
Tue Jul 28 2020
The Governments recent July Stimulus Plan announced an extension of the help-to-buy scheme to support new homeownership.
The Help-to-buy scheme will be enhanced for the remainder of 2020 (end of December 2020) so that the level of support available to first time buyers will be increased.
The main change to the scheme now sees First Time buyers been able to avail of the lesser of €30,000 (up from €20,000) or 10 per cent (up from 5 per cent) of the purchase value of a new property (either bought or built).
Help to Buy incentive
To claim Help to Buy (HTB) applicants 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 their main home for five years after they buy or build it
- be tax compliant, if they are self-assessed you must also have tax clearance.
Approved Developers and Contractors
The contractor that the home is been purchased from must be approved by Revenue. Applicants can check the list of approved developers and contractors to make sure that the developer or contractor is approved. It is important to note that the vendor must be tax compliant.
To qualify for HTB, the property that you build or buy must be:
- the applicants home
- newly built with the construction subject to Value Added Tax (VAT) in Ireland.
The purchase value of a new build means the price that you bought it for. For self-built property, the purchase value is the approved valuation by the lender at the time that you took out the mortgage.
If the property is bought between 19 July 2016 and 31 December 2016, the purchase price must be €600,000 or less. If bought after 1 January 2017, it must be €500,000 or less.
Applicants must take out a mortgage on the property with a qualifying lender. This loan must be used only for buying or building the property. The loan must be at least 70% of the purchase value of the property.
How Much Can You Claim?
The amount that can be claimed is the lesser of:
- €30,000 (announced in the July stimulus package – up to the end of December 2020). Due to revert to €20,000.
- 10 per cent of the purchase price of a new home. For self-builds this is 10 per cent of the completion value of the property (announced in the July stimulus package – up to the end of December 2020). Due to revert to 5 per cent.
- the amount of Income Tax and Deposit Interest Retention Tax (DIRT) paid in the four years before the purchase or self-build.
- The maximum payment is €30,000 per property up to value of €500,000. This cap applies regardless of how many people enter into a contract to buy a house.
How Will the Refund be Paid?
If the property was bought or built between 19 July 2016 and 31 December 2016, the refund will be paid directly to the applicant.
If the property is bought after 1 January 2017, the refund will be paid to the contractor.
If the property is a self-build after 1 January 2017, the refund will be paid to the applicant’s loan provider bank account.
How to apply for Help to Buy?
Applicants must use myAccount or Revenue Online Service (ROS) to apply for HTB online.
There are two stages to the online process:
- the application stage
- the claim stage *
*Applicants must draw down within 2 years of claiming
If someone has applied but hasn’t drawn down the claim, can they re-apply for the revised amount?
A Help-To-Buy application can be cancelled and a new application can be made after the updated parameters are available in the HTB system. Work is ongoing to make the changes and have the updates available as soon as possible after the legislation is enacted. Please note that the increased limits are subject to the HTB conditions (i.e. whether the contract for the purchase of the house was signed, or the first tranche of the mortgage was drawn down, between 23 July and 31 December 2020).
If someone has already drawn down a claim recently can they now claim for the additional amount or will the revised amounts be backdated and if so to when?.
No, per the published draft legislation the updated parameters are applicable in the period 23 July to 31 December. So a claim verified previously cannot be amended and no additional claim is due.
For more information access the Revenue’s website. For queries relating to the above, please contact Pierce at email@example.com or Rachel firstname.lastname@example.org.
Brokers Ireland Network Services provides a mortgage packaging service for authorised mortgage Brokers. To find out more about the service please contact Kimberley Hyland and Kimberley@brokersirelandmortgages.ie
Director of Financial Services