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Mortgage guide

What is the Help-to-Buy scheme?

What is the Help-to-Buy scheme?
Daragh Cassidy

Daragh Cassidy

Head Writer

The Help-to-Buy incentive, also known as the Help-to-Buy scheme, is a Government tax refund scheme designed to help first-time buyers get the deposit needed to buy a newly built home. Borrowers can claim a maximum of 10% of the value of the property or €30,000 - whichever is lower.

The Help-to-Buy incentive, which came into effect in January 2017, is designed to help first-time buyers acquire the deposit necessary to buy a newly built home. Another goal of the scheme is to incentivise developers to build more houses and apartments.

After the Government's stimulus budget in July, first-time buyers can now claim a tax rebate of up to €30,000 for the purchase price of a new-build or self-build house or apartment. This is up from €20,000 when the scheme first came into effect.

Interested and want to know if you qualify? Read on…

How much can I claim under the Help-to-Buy incentive?

The maximum tax refund is now 10% of the value of the property or €30,000 - whichever is LOWER. The rebate is only available on properties valued at €500,000 or less.

This means that if you purchase a property for €300,000, you can claim the maximum rebate of €30,000. But if you buy a house for €400,000, the relief will be capped at €30,000.

New Help-to-Buy rates

House Price Relief Available  Rate
€200,000 €20,000 10%
€250,000 €25,000 10%
€300,000 €30,000 10%
€400,000 €30,000 10% up to €300,000
€500,000 €30,000 10% up to €300,000
€600,000 Zero  0%

Previous Help-to-Buy rates

House Price Relief Available  Rate
€200,000 €10,000 5%
€250,000 €12,500 5%
€300,000 €15,000 5%
€400,000 €20,000 5%
€500,000 €20,000 5% up to €400,000
€600,000 Zero  0%

So, if I’m buying a house today I can claim up to €30,000, right?

Well, yes… sort of. This is a tax rebate scheme and not a case of the Government giving away free money. So in order to claim, you must have paid the equivalent amount of income tax and/or DIRT in the preceding four years. So, if you are applying for €15,000, you must have paid at least this much to Revenue over the last four years.

The USC and PRSI are not taken into account when calculating how much you can claim. However, most people who have been living and working full-time in Ireland over the past four years will likely have paid more than enough income tax to fully qualify for the scheme. 

Does this mean I no longer need to save for a deposit?

If you qualify for the new higher rate of €30,000 you could, in theory, not need to save for a deposit if you're buying a property that's worth €300,000 or less.

However it's highly likely your bank will still want to see some evidence of savings and good money management before it approves your mortgage and you'll still need to have saved for things like stamp duty and solicitor's fees.  

When does the Help-to-Buy scheme end?

The expanded Help-to-Buy scheme rate of €30,000 is scheduled to run until 31 December 2020, although this date may be extended.

The previous Help-to-Buy scheme rate of €20,000 is still scheduled to run until 31 December 2021 having been extended by the previous Government in the 2020 Budget.   

Who can apply?

Any first-time buyer of a newly built home can apply for a tax refund under the Help-to-Buy incentive. However to qualify as a first-time buyer under the scheme, you must not have previously purchased or built a home yourself or with any other person.

If you're a joint buyer, and one applicant is a first-time buyer and another applicant is not, you cannot apply for the grant.

What types of properties are included in the scheme?

Only newly built homes and self-builds are included in the scheme. Conversions and restorations of old or derelict homes do not qualify, but the conversion of a non-domestic building for residential use may qualify.

I've already submitted a claim under the old rate. Can I reapply?

If you've already applied for the scheme under the old rate but haven't signed contracts or drawn down any part of the mortgage yet (in the case of self-builds) you can cancel your original application and reapply under the new rate.

However, if you've already signed contracts for your new home, or have drawn down part of your self-build mortgage, before 23rd July 2020, you cannot reapply at the higher rate. You can still avail of the lower rate though.

If I am applying for a tax refund on a self-build home, how does the Revenue determine its value?

If you are applying for the scheme for a self-build then Revenue will use the approved final valuation from your lender and not the actual cost of building the home.

Can I buy a house for cash and apply for a tax refund from the Help-to-Buy scheme?

No. The purpose of the Help-to-Buy scheme is to assist first-time buyers with getting the deposit necessary to buy a home. Therefore, you must take out a mortgage to buy the property, and the loan-to-value of that mortgage must be more than 70%. Also, the loan cannot have a guarantor.

So if you're buying a house worth €250,000, the amount you're borrowing must be at least €175,000.

Do I have to live in the property?

Yes, you must use the property as your principal private residence for a period of five years. If you don't comply with this rule, Revenue reserves the right to claw back the refund.

Does the builder of the property need to be registered with Revenue?

Yes, you'll need to ensure that the builder of your home is registered as a Qualifying Contractor with Revenue if you wish to claim a refund under the scheme. The Revenue maintains a list of Qualifying Contractors which you can see here.

Can I use my potential Help-to-Buy refund as part of my mortgage application?

Yes, you should be able to. Once you complete an application, you'll be shown the maximum relief available to you. You'll also receive an application number and an access code which can be provided to your lender to verify your Help-to-Buy relief.

Are there any other caveats or conditions?

Yes. Here are some of the important ones.

  • You must have been fully tax compliant in the four years previous to the claim. If you haven't already done so, you'll need to complete a Form 12 (for PAYE workers) and Form 11 (for the self-employed) in respect of each of the four years. You must also pay any outstanding taxes that are due.

  • The Help-to-Buy scheme is for owner-occupiers only. You can't apply as an investor or a landlord.

  • Revenue will confirm your application with the contractor that you are buying from, or your solicitor if you are building your own home. Solicitors and contractors need to be registered with Revenue for the Help-to-Buy scheme.

  • If your new home is a self-build, it must be a qualifying residence and cannot be a building which was previously used, or suitable for use, as a dwelling. However, Revenue says that properties which have never been used as a dwelling and are now being converted for residential use may qualify.

  • You must live in the house for at least five years after you buy or build it.

How do I apply?

You can apply online through Revenue’s MyAccount service. And as long as you are tax compliant, Revenue will provide you with a summary of the maximum refund available to you within around five working days.

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