Help to Buy Scheme
What is the Help to Buy Scheme? Who is eligible for it? How do you qualify? How much can you claim?
These are just some of the questions that we are regularly asked by first time buyers, so we decided to put together this blog to answer all your questions.
If you are a first-time buyer and are thinking about availing of the Help to Buy incentive when purchasing your new home, then read on for our guide on the help to buy scheme. The great news is that the Help to Buy scheme has been extended until 31 December 2022.
First Up – What is the Help to Buy scheme?
The Help to Buy scheme is an initiative by the government designed to help first time buyers raise the money for the deposit of their first home. Under this initiative, first time buyers can receive a refund or rebate of Income Tax and Deposit Interest Retention Tax (DIRT)* that was paid over the previous four tax years.
Sounds good! So, how do I qualify for the scheme?
In order to qualify for the Help to Buy scheme you must be a first-time buyer purchasing a new home to live in and borrowing at least 70% of the value of the property – cash buyers do not qualify for the scheme. The cost of the property must be €500,000 or less to qualify for the scheme.
To qualify for the scheme,
You must not have owned a property in Ireland or abroad
if buying with a partner, both of you must be first time buyers.
You must use the property as your primary residence for a minimum of five years.
Please refer to revenue.ie and follow the steps to see if and how much you might qualify for.
How much relief am I entitled to? How do you work out the relief you could get for a new home?
That depends on the cost of the home and the amount of Income Tax / DIRT you have paid over the previous 4 years. 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 new build properties valued at €500,000 or less.
For example:
New Build Property €400,000
Buyers 10% HTB €30,000 (cap)
10% Deposit less HTB = €10,000 *paid already at time of reservation in the form of a booking deposit*
90% Mortgage = €360,000
This has been a huge help for first time buyers in recent years in getting their foot on the property ladder.
Ready to avail of the Help to Buy scheme? Great! Here is what to do next:
1. Before you pay a deposit on your new home you must have already applied for the HTB and have received a set of codes from the revenue. These codes will need to be provided to an O’Connor Murphy agent before reservation along with your full proof of funds.
2. A booking deposit is paid and your solicitor details are provided to the O’Connor Murphy sales agent. You are now “sale agreed” and contracts are issued to your solicitor, to be signed within 28 days. At this stage the booking deposit is fully refundable if you change your mind.
3. On signing your contracts, you pay the balance of your 10% deposit less the HTB amount you have qualified for, and the initial booking deposit you have paid on reservation.
4. Once the contracts are signed by both the purchasers and the developer and are “exchanged,” your solicitor will then assist you in uploading your exchanged contract to the revenue using your existing HTB codes.
5. The revenue will provide you with another set of codes that must be provided to the developer’s solicitor in order for the developer to claim the HTB refund.
*Some developers implement the scheme differently
O’Connor Murphy has a number of developments that are HTB approved and our experienced team are here to answer any HTB related questions you may have.