For many first-time buyers, the prospect of securing their very own home is a daunting one. Understandably so, considering it is likely to be the biggest financial investment you will ever make in your lifetime.
Saving for such a momentous milestone can be an arduous task that requires a lot of sacrifice and motivation, so those on the mortgage trail will no doubt be very interested to learn that there is a way to potentially make this process shorter and a lot less demanding financially.
The Help to Buy scheme is a government-run tax refund initiative that allows those eligible to claim a tax rebate of up to €30,000. The scheme operates by refunding deposit interest retention tax (DIRT) and income tax that has been accrued over the four-year period before application. It is not possible to claim a tax refund on USC or PRSI.
The initiative, which has now been running for almost five years, was originally due to expire in July 2020 but was extended until December of that year. A further extension as part of this year’s budget will now see the scheme in operation until the 31st December 2021.
Successful applicants can avail of a tax refund that is the lesser of the following: 10 percent of the property’s value or €30,000. With 5,512 applications approved in the 11-month period from January to November 2020, it is most certainly an initiative worth exploring.
Who’s eligible?
The scheme is available to first-time buyers only. In the case of a joint mortgage, all parties involved must be first-time buyers. Furthermore, the first-time buyers in question must be purchasing a new build or opting for a self-build project, as the initiative does not apply to “second-hand” properties.
This caveat ensures that the scheme not only helps a first-time buyer to fund their deposit, but also acts as an incentive to housing developers to keep up with increasing demand.
What are the conditions?
Aside from the key criteria above, there are further boxes that need to be ticked before you have the green light to apply for the Help to Buy scheme.
1. Tax
In order to qualify, the amount of tax you’ve paid over the previous four years must exceed or be equal to the amount of relief you apply for. For example, if you are applying for the maximum tax rebate of €30,000, the income tax or DIRT you have paid to Revenue over the course of the past four years must add up to €30,000 or more.
You must also be able to prove that you have been tax compliant for the four-year period in advance of your application. Any outstanding tax you owe must be paid before the process can begin.
2. Cost
The property you build or purchase must cost €500,000 or less. Its value cannot exceed this cap. In the case of a self-build, the estimated cost of the property will not be determined by how much it cost you to build, but rather by means of a valuation carried out by your mortgage lender.
The mortgage lender in question must also qualify as associated with the scheme and the loan must be at least 70 percent of the purchase value of the property.
3. Main Residence
In order to be in compliance with the scheme, the property must serve as your main place of residence for a period of five years from the reward of the refund. “Claw back” is a term used to describe the process of Revenue revoking your rebate should you be found in breach of this stipulation.
4. Qualifying Contractor
Before beginning the application process, you must ensure that the developer of your property is registered with Revenue as a Qualifying Contractor. You can find this out by checking the list, which is available to view on the Revenue website.
5. Solicitor
Similarly, you will require the services of a solicitor to verify your claim and they must be classed as a registered solicitor with Revenue in order to be in a position to work on your behalf.
6. Inheritance/ Gifts
Although the scheme is not open to cash buyers, your eligibility will not be affected if you have inherited or been gifted a property.
Although potentially very rewarding, navigating a process like this can seem overwhelming and you may require some help to ensure you have all your ducks in a row.
As expert mortgage advisors, Symmetry Financial offer clear, simple and concise advice and will be on hand to guide you through the Help to Buy process, as well as your entire mortgage journey.
If you think you may be eligible for Help to Buy but would like to discuss the process with a professional, book a consultation with Symmetry Financial today and you’ll be one step closer to hopping on that property ladder!
