Billy Timmins (Wicklow, Independent)
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41. To ask the Minister for Finance the position regarding the home renovation incentive scheme for the installation of a new conservatory; if the cost of a conservatory can be included in overall renovation and building costs when calculating a tax rebate; and if he will make a statement on the matter. [5957/14]

Michael Noonan (Limerick City, Fine Gael)
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The Home Renovation Incentive (HRI) provides for an income tax credit for homeowners who carry out repair, renovation or improvement work on their only or main residence. Qualifying work must cost a minimum of €4,405 excluding VAT. The maximum qualifying cost for the purpose of the Incentive is €30,000 excluding VAT.  Qualifying expenditure is expenditure subject to the 13.5% VAT rate.   Expenditure which is subject to the 23% rate of VAT does not qualify for relief.

Services consisting of the construction, demolition, extension, alteration or reconstruction of any building are liable to VAT at the reduced rate of 13.5% unless the value of movable goods, such as timber, windows, doors, etc., exceeds two-thirds of the total amount charged by the contractor.  Where this happens the contractor will charge VAT at the standard rate of 23% on the total amount and this total amount is excluded from relief under the HRI.  A contractor may be in a position to invoice separately for materials and labour and in such circumstances the labour amount that is chargeable at 13.5%, can come within the HRI relief.  This practice is acceptable provided the split between materials and labour is realistic and is not done to avoid VAT.

With regard to the installation of a new conservatory that is purchased separately by the homeowner, the cost of the conservatory will not qualify for relief as the supply of a conservatory is subject to the 23% rate of VAT.  However, if the conservatory is supplied and installed by a contractor, the entire cost of the supply and installation would be qualifying expenditure if the contract to supply and install is liable to VAT at 13.5% where it meets the two-thirds rule referred to above.