Understanding the Help-to-Buy Scheme
According to an article recently in the Irish Times, new figures show that more than eight out of 10 first time buyers are now relying on the State scheme to purchase a new home. Unfortunately, the scheme is due to end this year and the Government to date, have made no announcements to extend it (although an extension or replacement is likely). For first time buyers, the Help-to-Buy (HTB) scheme has helped many by way of tax rebate. It has afforded prospective buyers an opportunity to buy or build their new home to pay their mortgage deposit by giving them a tax rebate based on the value of their new home. The scheme was rolled out to increase the number of new homes to the market and hopefully, tackle housing shortages. As the HTB scheme comes to an end later this year (this may change in Budget 2020), it is vital that any first time buyer gets their foot on the ladder before the incentive ends so here are a few things first time buyers need to know:
The HTB scheme is only for new homes or new self builds and not second hand homes. The incentive can be backdated to July 19, 2016. First time buyers will still qualify for the incentive as long as they have signed the contract between July 19, 2016, and December 31, 2019.The HTB tax rebate is available of up to €20,000 to aid first time buyers in the purchase of their new home and the home must be bought from a qualifying contractor. Qualifying contractors are property vendors who are registered with the Revenue and are tax compliant.
The HTB works well for those who struggle to afford the 10% deposit but the incentive is not available to cash buyers or investment property buyers.
The HTB scheme is only for new houses costing up to €500,000. For a quick analysis of the breakdown, here it is:
Purchase price €500,000, 10% deposit = €50,000
First time buyers need to save €30,000 with potential additional €20,000 from HTB tax rebate. According to the latest figures as of April 2019, the HTB scheme claimed that 12,101 claims had been made with 11,512 being approved. The total value of the approved HTB claims to date are estimated at being in the region of €168.6 million.
The HTB is only for first time buyers and if you or your partner have previously purchased a home by yourself or with someone else, you won’t qualify for HTB. Some buyers opt to take the mortgage out in their own name to claim the rebate but then the application is a lone one and can prove difficult.
Before any tax rebate is issued first time buyers will need to show their own tax compliance and file tax returns for the previous four years. Buyers need to show a copy of a signed contract, proof that the balance of the deposit is paid, property details, purchase details, lender information and mortgage approval details. There are lots of paperwork required and everything should be considered beforehand.
The HTB scheme is due to finish at the end of 2019. With the new tax rebate only available until the end of 2019, now is the best time to buy your new home.
Find out more details about the scheme here.
To discuss this and other housing matters in Dublin, please contact me directly on +353 (0) 87 937 0896, Derek@VictoriaHomes.ie or check out all of our current developments at www.victoriahomes.ie/