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.