Written answers

Tuesday, 22 October 2019

Department of Finance

Help-To-Buy Scheme

Photo of Michael Healy-RaeMichael Healy-Rae (Kerry, Independent)
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144. To ask the Minister for Finance if he will address a matter regarding mortgages (details supplied); and if he will make a statement on the matter. [43004/19]

Photo of Paschal DonohoePaschal Donohoe (Dublin Central, Fine Gael)
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The Help to Buy (HTB) incentive is a scheme to assist first-time purchasers with the deposit they need to buy or build a new house or apartment. The incentive gives a refund of Income Tax and Deposit Interest Retention Tax (DIRT) paid in the State over the previous four years, subject to limits outlined in the legislation.   

Section 477C of the Taxes Consolidation Act 1997 outlines the conditions that apply to the HTB scheme.  One such condition is that a qualifying first-time buyer must take out a loan in an amount equal to at least 70% of either the purchase price of the property in the case of a purchased house, or the value of the property in the case of a self-build house. The valuation of a self-build house is as approved by the lender, determined in accordance with the Central Bank’s macro prudential rules.  These rules stipulate the valuation as being the site cost plus the cost of construction.

I am advised by Revenue that the process for a first-time purchaser will involve two stages. There will be an initial Application, followed subsequently by a Claim for Rebate.  In making the initial Application, it is anticipated that a person who intends to avail of the HTB scheme may not yet have made his or her final decision regarding the house or apartment he or she wishes to purchase or the choice of lending institution. To facilitate first-time buyers in making those decisions, following receipt of an Application and subject to the applicant satisfying the terms of the scheme, Revenue will notify the applicant of the maximum tax rebate that may be available to them.  The prospective purchaser is then able to share this information with a lending institution when negotiating a loan. 

When purchasers have determined the choice of residence and negotiated their mortgage, they can complete their Claim for Rebate.  At that stage, they will be in a position to provide Revenue with details of the property, the purchase price / valuation and the mortgage approval.  A key requirement for the relief is that the minimum loan-to-value ratio of 70% mentioned above must be observed.  As part of the Claim for Rebate process, the vendor will be required to confirm to Revenue the details of the contract to enable the payment of the rebate to be made.  In the case of a self-build, the solicitor acting on behalf of the first-time buyer will be required to make the necessary confirmation to Revenue; once verified, the refund is paid.

As the loan-to-value ratio of the property in the case outlined by the Deputy is stated to be less than 70%, that person’s application does not meet the conditions required to qualify for HTB relief.

Revenue does not have discretion to vary the conditions for qualification for relief under the HTB scheme.

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