Friday, January 20th, 2017
Home Renovation Scheme Extended
The Home Renovation Scheme will be refunded in the form of a tax credit of 13.5% of the expenditure in the repairs that qualifies. This is then offset against your income over the next two years. The 13.% tax credit effectively negates the Value Added Tax to zero on the qualifying work and it does so up the value of €30,000. The Scheme was introduced back in 2013 and for those interested, to qualify for the Home Renovation Scheme, the renovations to the property must be carried out between October 25th 2013 and 31 December 2018. The extension to 2018 was introduced in Budget 2017.
Irish Homeowners are back spending money again, with the renovation of their existing homes. Taking advantage of the current grants available to homeowners from the government. One such scheme currently running is the Home Renovation Incentive which was rolled out by the government to kick start the construction industry. Launched by Michael Noonan in Budget 2014, The Home Renovation Incentive Scheme (HRI) offers a window of time in which homeowners can save round 10pc on the construction and up-grading of the their property. work at a time when labour costs for home improvements are at their lowest in 15 years. It was introduced in October 2013 and was taken up by 14,438 properties in 2014 with a total spend of €293m which was released by the revenue commissioners. RTE released an article stating the breakdowns as 37% for home extensions, 22% of claims were for general repairs and renovations and the rest were for windows, kitchen and bathroom refurbishments.
Dubliners accounted for the majority of the works, spending €162.8m.
That was followed by Cork (€29.7m), Kildare (€12.1m), Galway (€10.8m) and Wicklow (€10.1m).
The lowest spend was in Cavan, Longford and Monaghan where 235 works were carried out at a total value of €2.5 million.
The HRI is also available this year and was extended to rental properties in October last.
It has never been a better time to renovate or add some additional space to your home with house prices again on the rise and a shortage of new and existing homes coming to the market. When labour costs for home extensions and improvements are at their lowest in 15 years. Families are choosing to add additional space to their home by extending up or out. With the largest amount of spend within Dublin. It is clear to see that the trend will be that prices will start to increase for trades over the coming years as demand is put back on the trade sector again.
Do i Qualify ?
To qualify for the HRI as an owner-occupier, the work must be carried out on your principal private residence also landlords can qualify in respect of work done on their rental properties. Whether you are a homeowner or a landlord, you have to be up to date on your taxes, i.e. local property tax and house hold charge. You have to be paying income tax either self-employed or PAYE for the HRI scheme. You must only engage with a building contractor to carry out a home extension or other building works if they are VAT (Value Added Tax) in Ireland and are tax compliant. If a number of contactors carry out work on your property and are not under the one contractor you may combine the cost of the total works up to the maximum qualifying grant of €30k before Vat @ 13.5%. (The maximum is €4,050, based on the maximum qualifying expenditure of €30,000) Items that are VAT @ 23% are not cover like architects fees, white goods and furniture. The work that qualifies must cost at least €4,405 before VAT at 13.5%, which adds to a total of €5,000 with VAT included. You will only get the tax credit in relation to a maximum of €30,000 (before VAT) during the 2 years covered by the HRI. (The minimum credit is €595, based on the minimum qualifying expenditure of €4,405) The maximum is €4,050, based on the maximum qualifying expenditure of €30,000.
Types of work that Qualifies
Repair, Improvements and Renovation works and that is charged @ 13.5%
How long do I have to avail of the HRI Scheme
When and how will I receive a rebate on my HRI
Some tips when choosing and working with a contractor to complete your work
Some institutions to look for credit if you are not sitting on a stash of cash is Bank of Ireland they have setup a special €75m fund to lend to homeowners and landlords under HRI. The most likely of the institutions was the Credit Unions which was of course there man bread and butter. But with the hard times we have just gone through they have and a tightness of credit, they have indicated they hope to start lending in this area again. Of course personal loans are available for terms of 10 years and or “top up mortgages ” which would allow borrowing €20,000 over a term of 20 years repaying €125 per month as an example. This would wipe out any saving made with additional repayments close to €10k in the end.