Key Highlights of the Scheme:
The Help to Buy (HTB) scheme revolves around aiding first-time buyers in financing their initial deposit to either purchase or self-build a new property intended to be their primary residence. Key to the HTB scheme is the provision for a refund of Income Tax and Deposit Interest Retention Tax (DIRT) that applicants have paid over the last four tax years. This comes with certain limitations as described under section 477C Taxes Consolidation Act 1997. In response to the economic fallout from the pandemic, the government augmented the original scheme in 2020 and extended it until 31 December 2024. This improved package offers greater benefits, including an increased maximum potential refund of €30,000, up from the previous €20,000.
To avail of the scheme, prospective applicants can apply online. If the applicant is a self-assessed taxpayer, the application should be submitted through ROS, and if they are a PAYE employee, they should apply through MyAccount. Both self-assessed taxpayers and PAYE employees will need access to MyEnquiries, a secure online contact facility for corresponding with Revenue.
There are two categories of applicants who can apply: first-time purchaser applicants and first-time self-build applicants. The refund for first-time purchaser applicants will be paid to the approved developer/contractor as part of the deposit, while in the case of self-build applicants, the refund will be paid to the mortgage institution.
Before making an HTB application, it’s important for first-time buyers to check that their contractor is on the list of ‘Qualifying Contractors’. Additionally, applicants need to ensure they are tax compliant, having filed all necessary tax returns and cleared any outstanding balances.
Special provisions have been made to accommodate the impact of COVID-19 on taxpayers. If an applicant has an underpayment of tax in 2020 due to income from the Temporary Wage Subsidy Scheme (TWSS) or Pandemic Unemployment Payment (PUP), Revenue will still allow a HTB refund. However, any outstanding liability not related to the PUP or TWSS must be cleared before the HTB refund can be given.
The HTB process is segmented into three stages. The first stage is the application stage, where applicants provide information and compliance checks are done. The second stage, the claim stage, requires applicants to provide more details about the property and their mortgage. At this point, the maximum amount of HTB relief available is communicated. Finally, in the verification stage, the claim needs to be verified by the developer/contractor or the solicitor, as appropriate.
The maximum amount of HTB relief you are eligible for depends on whether you qualify for the original or the enhanced scheme. The original scheme offers the lesser of €20,000, 5% of the purchase price/value of your property, or the amount of income tax and DIRT you have paid in the four years before applying. For those qualifying for the enhanced scheme, the relief will be the lesser of €30,000, 10% of the purchase price/value of the property, or the amount of income tax and DIRT paid in the previous four years. However, it’s important to note that the final refund received is limited to 10% (or 5% under the original scheme) of the purchase price or valuation of the property.
The Help to Buy scheme – COVID-19 Supports (PUP, TWSS) Underpayments
In the wake of the global pandemic, the government acknowledged the financial burden on taxpayers due to COVID-19-related income sources. As such, applicants receiving income from the Temporary Wage Subsidy Scheme (TWSS) or the Pandemic Unemployment Payment (PUP) will still be eligible for the HTB refund even if they have an underpayment of tax for 2020. However, this provision only applies if all other conditions of the HTB scheme are met. It’s crucial to note that any outstanding tax liability unrelated to the PUP or TWSS must be fully paid before the HTB refund can be processed.
There are three stages involved in applying for the HTB scheme: the application stage, the claim stage, and the verification stage.
Stages of the HTB process
Remember, the refund you receive is limited to 10% (or 5% under the original HTB scheme) of the purchase price or approved valuation of the property. This means that the final refund might differ from the maximum relief amount advised during the application stage. Despite this, the Help to Buy scheme can significantly aid first-time buyers in taking that initial leap onto the property ladder. It is an important aspect of the government’s ongoing efforts to support home ownership and stimulate economic activity within the housing sector.