Help to Buy Incentive Summary (February 2017)
The Help to Buy incentive is designed to assist first-time buyers with obtaining the deposit required to purchase or self-build a new house or apartment to live in as their home. This is designed to give the maximum benefit to first time buyers and to assist in their accessing new build properties by taking away the requirement to have the full deposit required. Please note that we do not deal with self build properties in this note.
The incentive provides for a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid over the previous four tax years to first-time buyers who purchase a new house or apartment to live in as their home. This additional assistance will help many of the clients of Propertylawsolicitor.ie access the property they have been saving for much quicker than would have been the case until the introduction of this scheme.
The main provisions of the Help to Buy Scheme are as follows:
A. Who is entitled to claim?
A first-time buyer of a house or apartment who purchases a new residential property between 19 July 2016 and 31 December 2019 may be entitled to claim a refund of Income Tax and DIRT paid over the previous four years.
The first-time buyer must not have either individually or jointly with any other person (directly or indirectly), previously purchased, or built a house or apartment. Where more than one individual is involved in purchasing or building a new home, all of the individuals must be first-time buyers. It is important to note that in the event that you make a claim and are not entitled to that there is a clawback provision. You also must remain living in the property for a period of five years. If you do not then the revenue can seek a refund from you the purchaser and will not be seeking the refund from the builder/developer.
Note: to benefit from the scheme your contract must be a Revenue approved contractor. Here is an up dated list of approved developers/contractors on the Revenue website which you need to ensure your developer listed on.
You must be Tax Compliant and if you are self assessed you must also have an eTax clearance certificate.
B. What is a qualifying property?
For a property to qualify under the scheme it must have been purchased as the first-time buyer’s home. It does not include properties acquired for investment purposes. It must be a new build and the construction must be subject to VAT in Ireland. Properties which have never been used as a dwelling and are now being converted for residential use may qualify. The purchase value of the property cannot be more than €500,000 for properties bought after 1 January 2017.
You must take out a mortgage on the property with a qualifying lender and this loan must be used solely for the purchase or building of the property. The loan should be entered into solely by the first-time buyer and the lender. A guarantor on the loan is allowed. The loan to value ratio must be greater than 70%.
C. What you need to do before you apply
PAYE taxpayers need to submit a Form 12 (where they have not already done so) for each of the tax years they select. On receipt of your Form 12, Revenue will send you a Form P21 Balancing Statement. You must hold a Form P21 for each of the years you select before you apply for the Help to Buy incentive.
Online Forms 12 for 2013 onwards are available through myAccount and are pre-populated with your pay and tax details. A paper Form 12 for 2012 (PDF, 1.79MB) (if required) can be downloaded. When you have completed the paper Form 12, you can scan it and then upload it in MyEnquiries. To do this, you can click Add New Enquiry, and select ‘Help-To-Buy Scheme’ and ‘Form 12 (2012)’ from the dropdown options available under ‘My Enquiry Relates To’ and ‘And More Specifically’. Then you attach the scanned Form 12 documentation and submit your enquiry.
Self-assessed taxpayers must be fully compliant, have eTax clearance, and must therefore have paid and filed for the years in which they are a chargeable person. Online Forms 11 are available for all years through ROS.
D. How to apply
You can apply online. There are two stages to the HTB electronic process - an application stage and a claim stage.
A. Application Stage
You will be required to provide your PPSN, and complete a declaration. Provided that you are tax compliant you will be provided with an Application Number and a summary of the maximum relief available to you. You will be issued with an Access Code separately through MyEnquiries. You should retain both of these safely as you will require them for your lender. If you are purchasing your home you will require these for your qualifying contractor. These numbers need to be furnished to your solicitors as soon as they become available as they need to be furnished to the contractors solicitors at the earliest possible opportunity.
B. Claim Stage
Once you have signed the contract for your home and are ready to make your claim you need to complete the following steps;
Step 1 – Upload the following information about your application through MyEnquiries. (You should take note of the reference number given).
$1· a copy of the signed contract
$1· evidence of your mortgage (including loan-to-value ratio)
Step 2 - You should then login to HTB through myAccount or ROS and make your claim. You will need to include your MyEnquiries reference number. You will be asked to confirm details relating to the property, the purchase price, date of completion, mortgage details, and the deposit already paid. Group applicants will also need to provide the amounts of the agreed portion of the refund applicable to each member of the group. Once you have submitted your claim you will be provided with a claim number.
Please ensure you have carefully checked all the information you input before signing and submitting the claim. It will not be possible for you to cancel the claim afterwards.
Step 3 - Once the claim is submitted, you should advise your Developer/Contractor, and provide them with your claim number and the access code already provided. Before any refund is paid, the information you have given will need to be verified by
$1· the Developer/Contractor in the case of a new purchase,
$1· You should also provide this information to your own solicitors directly as the information will then be passed onto the developer/contractors solicitors.
E. Claims Compliance– Clawback Provisions
As mentioned earlier there are a series of clawback provisions which are linked to entitlement to the refund, ceasing occupation of a qualifying residence or non-completion of a purchase or non-completion of a qualifying residence. In the period from 1 January 2017 to 31 December 2019, contracts between first-time purchasers and qualifying contractors will result in the refunds being paid directly to the contractors as a credit against the purchase price or deposit of the qualifying residences.
‘Clawback’ from a qualifying contractor will happen where:
$1a. the qualifying residence is not subsequently purchased by the claimant within two years from the date of the making of the refund payment to the contractor, or
$1b. if, in the opinion of Revenue, there are reasonable grounds to believe that the purchase of the qualifying residence by the claimant will not be completed within that two year period.
There will be some flexibility around the two-year period where Revenue are satisfied that the qualifying residence is substantially complete at the end of the two year period or is likely to be completed within a reasonable period of time thereafter.
Once the residence is completed and conveyed to the first-time purchaser any further compliance responsibilities, such as the obligation to use the house as a principal private residence for a period of five years, become the sole responsibility of the purchaser as the developer cannot be held responsible for such matters. If you need any further information from a solicitor at Property Law Solicitor or if you are looking for a low cost fixed fee conveyancing quotation then please do not hesitate in contacting us directly by e.mail to info@propertylawsolicitor or in the office on 01 2300022.