In light of the recent announcement by the Central Bank that they are relaxing the loan to value requirement for first time buyers to 90%, first time buyers are now at a serious advantage over second time buyers when it comes to buy new built houses or apartments. I have gone through the details of the Help to Buy Scheme in further detail below.
What are the tax benefits under the Help to Buy Scheme?
- You can claim a tax rebate on any income tax paid in the previous 4 years.
- The rebate is 5% of the value of the property up to a maximum of €20,000 per property (not per joint owner).
- The rebate is also limited to the actual amount of income tax paid in the previous 4 years. So if you paid less than €20,000 income tax, you get a rebate of the actual income tax paid.
Who can claim benefits under the Help to Buy Scheme?
- First time buyers of a house or apartment bought from 19 July 2016 until 31 December 2019.
- If being bought by a couple, both have to be first time buyers.
- The property must be bought to be your home. The incentive does not apply to properties bought as investments.
- You must live in the property for at least 5 years from the time that they property is completed.
- The rebate only applies where the loan to value is at least 70%. It is rare that a first time buyer purchases a home with a mortgage less than 70% of the property value.
- The loan to value of the The rebate only applies where the loan to value is at least 70%.
- The rebate does not apply to house purchases over €600,000.
What does all this mean to me?
This scheme, combined with the relaxing of the deposit required for first time buyers to 10%, has made it a lot easier to get on the property market.
Example – Purchase a property for €300,000
Old rules – €38,000 deposit required
New rules – €30,000 deposit required, of which €15,0000 will be provided through a tax rebate
All we need now are suitable new homes to be built!