Tuesday 25 October 2016

First-time buyers have just three years to avail of tax rebate up to €20k

Cormac McQuinn Political Correspondent

Published 11/10/2016 | 13:27

(Stock image)
(Stock image)

FIRST-TIME home buyers will have just over three years to avail of the government's new 'Help-to-Buy' scheme.

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Finance Minister Michael Noonan announced the scheme saying he expects the the building industry to meet the demand for new homes.

He said that the Central Bank has agreed to the measure.

The scheme takes the form of a tax rebate of up to 5pc of the purchase price of a new-build home up to €400,000.

The purchase of new homes up to €600,000 will be covered but there will be a €20,000 ceiling on the tax rebate available.

Mr Noonan said the scheme is backdated to July 19, the date that the Action Plan for Housing was announced and it will last until the end of 2019.

The Society of Chartered Surveyors Ireland has said the ‘Help to Buy’ scheme announced will have very little impact on the housing crisis because supply is the problem, not demand.

Claire Solon, the President of the SCSI, explained: "In our view, the Government should have been focusing on initiatives to make development viable, like reducing VAT on affordable housing, making public land available for affordable housing schemes and providing finance to help kick-start building on sites around the country, with all the employment and tax benefits that this would bring."

She said that she can see what the government is trying to achieve "but we just don't see it happening".

She said that government attempts to bring more young people into the market will, in the short term at least, "just mean greater competition for those few properties that are available across all sectors including tenants, students, social and affordable housing".

"As we have seen increased competition means higher prices,” Ms Solon said.

The Society welcomed the allocation of €1.2 billion in funding to the Department of Housing, Planning, Community and Local Government and the undertaking to deliver 47,000 new social houses by 2021.

Ms Solon also welcomed the increase in interest relief available to landlords to 80% in 2017 and the commitment to increase it to 100% in subsequent budgets.

However she said it was disappointing that the Government did not take the opportunity to recognise the importance of a stable residential rental sector to the economy and society as a whole and put it on par with commercial property investment. 

 “To tax the residential investor differently to the commercial investor does not make sense, as it further reduces the choice and supply to those households who need or want to rent their homes.  Property investment is a business and should be treated as such, with realistic tax thresholds, professional management and enforceable standards” she said.

The Society noted the Minister’s commitment to undertake a review of corporate taxation including Section 110 of the Tax Consolidation Act.

The SCSI urged the Minister to take full account of the use of these provisions and to announce any proposed changes as early as possible to avoid further uncertainty in the market.  The Society said there was already evidence of deals being postponed in anticipation of what these proposed amendments will be.

The Society welcomed a number of other property measures including; the extension of the Home Renovation scheme to 2018, the raising of the income ceiling of the rent-a-room scheme to €14,000 and changes to the Living Cities initiative.

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