How we spent €115m doing up homes after tax break
Published 11/07/2014 | 02:30
HOMEOWNERS have spent almost €115m doing up their homes since the introduction of a lucrative tax break aimed at bolstering the construction sector.
The Irish Independent has learned that 6,892 projects, including extensions and new kitchens, have been completed since last October under the Home Renovation Incentive introduced in the Budget.
And a county-by-county breakdown shows the biggest average spend, at almost €23,000 per project, is in Sligo.
It's followed by Dublin city – home to upmarket suburbs such as Ballsbridge and Donnybrook – at almost €22,900. The lowest is in Westmeath, where just over €9,000 was spent.
The scheme provides tax relief to homeowners where 13.5pc of the spend is returned by way of an income tax credit paid over two years.
The minimum investment is €4,405, excluding VAT, and maximum is €30,000. The tax relief ranges from €595 to €4,050.
The amount of tax "lost" to the Exchequer and returned to homeowners is likely to be no more than €20m, the Revenue Commissioners said. This was because some projects would cost more than €30,000, and only the eligible portion would receive the relief.
Hundreds of construction jobs have been created as a result, builders lobby group the Construction Industry Federation (CIF) said, adding that it also brought many companies out of the black economy.
"It's fantastic news to see those kind of figures," a spokesman said. "We said this would generate a lot of activity, and the figures seem to be bearing that out.
"It's bringing a lot of companies into the tax net. A lot of those jobs were going to the black economy, and that competitive advantage is gone.
"You're also taking people off the dole, so the success is at both ends – they're no longer receiving social welfare, and they're paying tax."
Mr Noonan said the introduction of the incentive was contributing to a "gradual pick-up" in employment in the construction sector.
Only households which have paid the property tax and household charge are eligible, and builders must be tax compliant. The minister said that the system would allow Revenue to identify additional compliance programmes to identify shadow economy activity within the construction sector.
"In this regard, this is an opportune time for contractors who are operating in the shadow economy to register for tax purposes and to regularise their tax affairs and avail of the opportunities that will continue to come on stream in the construction sector," he said.
Eligible projects range from window replacement to new kitchens and bathrooms, extensions and attic conversions, painting and decorating and septic tank replacement.
It runs until the end of the next year, but the CIF said consideration should be given to extending it and lowering the amount to be invested before tax relief could be claimed.
"At the moment you have to spend more than €4,000 but if that was lowered, it would bring more people into the tax net," the spokesman said.