×
Independent

Home-buyers DIRT refund dismissed as a 'gimmick'

First-time buyers will get a refund on the Deposit Interest Retention Tax (DIRT) on savings being used to build up a deposit to buy a home. THE small number of first-time buyers who will qualify for a new savings tax refund has been criticised – Charlie Weston

Finance Minister Michael Noonan told the Dail recently that around 9,500 new home-buyers will benefit from the measure in 2015.

The minister estimates the overall cost of the scheme will be €2.8m, he told Fianna Fail finance spokesman Michael McGrath.

First-time buyers will get a refund on the Deposit Interest Retention Tax (DIRT) on savings being used to build up a deposit to buy a home. They will have to pay it first, and then seek a refund. The refund will apply from now and will run until the end of 2017.

Mr Noonan told the Dail the refund will be limited to savings that represent a maximum of 20pc of the purchase price of the property.

The relief will apply to DIRT paid for four years before a property is bought by a first-time buyer.

Mr McGrath claimed the tax refund was not going to make much of a difference to potential property buyers.

"The relief from DIRT for first-time buyers is little more than a gimmick.

"The actual benefit will be a fraction of what first-time buyers used to get from mortgage interest relief and, in most cases, will be less than their property tax bill."

Mr McGrath said the fact that only €2.8m is being set aside for the scheme meant an average of €294 for each first-time buyer. He added: "This is only a drop in the ocean in terms of the costs of affording your first home."

Simon Moynihan of price comparison website Bonkers.ie said the concession will mean that a couple who manage to save €6,000 in a year will get a refund of just €49 back. This is if they can get interest of 2pc and earn €120 before tax.

"The new Central Bank lending restrictions mean that a 20pc deposit is set to become standard from next year. Getting €49 back in DIRT is not going to go a long way when new buyers have to save double the previous amount to get a deposit together," he said.

Mortgage expert Karl Deeter said the DIRT refund would not make an significant difference given the new requirement for a 20pc deposit and very low interest rates.

Mr Noonan announced the measure in this month's Budget.

By using this website, you agree to be bound by our Terms of Use and consent to the use of cookies in accordance with our Cookie Policy.