Save thousands on buying your dream home with this range of tax breaks
A range of tax breaks and grants can help you buy a historic pile, a place in the country or fix up a vacant property to rent out
Tax breaks and grants can be worth tens of thousands of euro to house buyers - particularly those buying property which needs work. So such State digouts should be at the forefront of your thoughts if buying either a home or an investment property - because they could considerably ease the financial burden of such a big purchase.
Tax breaks and Government grants shouldn't be your only reason to buy property but should you inadvertently fail to qualify for them, you could lose out on a lot of money.
Here are some of the main property tax breaks and grants worth knowing about.
Should you be considering moving into or back to the country, the Government is set to offer grants soon to those buying homes in designated rural towns - as long as the money is used to renovate or refurbish the property. The grants are part of the Government's plan to encourage more people to live in rural towns and villages.
The Government will take its first step towards the roll out of these grants in the coming months. A pilot scheme, which will be launched in the second half of this year, will examine ways in which properties that are not in use in town centres can be renovated to allow them to lived in.
"It is envisaged that under the proposed scheme, a grant will be available to owner-occupiers to renovate or refurbish premises in town and village centres, to make them suitable for residential use," said the Minister for Arts, Heritage, Regional, Rural and Gaeltacht Affairs, Heather Humphreys.
Vacant home loans
New government loans are expected to be offered to owners of vacant properties to encourage them to refurbish those homes and either put them on the private market for sale - or rent them out to private tenants. These loans are set to be recommended to the Housing Minister, Simon Coveney, in a report due to be published shortly.
There is already a scheme where you can get a vacant property repaired - as long as you make it available for social housing for at least 10, 15 or 20 years (depending on the cost of the repairs). The Repair and Leasing Scheme is aimed at owners of vacant properties who cannot afford the repairs needed to bring their property up to the standard for renting.
This scheme can be particularly useful if you already own your home and have just inherited a property which is run-down - but you cannot afford to renovate it. The cost of any repairs will be initially met by your local authority or an approved housing body - but that cost will over time be taken out of the rent you earn from leasing your property to social housing tenants.
To qualify for the scheme, your property must be suitable for social housing and it must also have been vacant for at least a year.
The scheme, which was initially piloted in Carlow County Council and Waterford City and County Council, has been rolled out nationwide. Before signing up however, bear in mind that you're likely to earn higher rent on the private rented market - and that you could raise money for repairs from your credit union or bank.
Landlord tax breaks
In a bid to encourage 'accidental landlords' to continue to rent out their homes, tax breaks for such landlords are being considered by Government.
In a public consultation earlier this year, the Department of Finance set out some possible tax measures which might be introduced for landlords. Some of the measures mooted include a tax exemption or relief for income from long-term leases, and tax relief for the capital repayments of a mortgage. Currently a landlord can get tax relief on the interest that arises from the mortgage of the rented property - however, relief cannot be claimed on the capital repayments (the portion of the mortgage repayment which is paid off the balance of the original loan).
Landlords and homeowners can already get tax breaks for repairs, renovations or improvements under the Home Renovation Incentive (HRI) scheme. Some of the work which qualifies for HRI relief includes extensions and attic conversions, the fitting of windows, garden landscaping, plumbing, rewiring, and the repair or replacement of septic tanks.
Should you wish to buy a historic home and get tax breaks for renovations - without the inconvenience of opening your home to the public, consider buying a property under the Living City Initiative, where owners of residential houses at least 100 years old can claim tax relief and refurbishing costs - over 10 years.
The Living City Initiative tax breaks can only be claimed on buildings in the historic centres of six cities - Dublin, Cork, Limerick, Galway, Waterford and Kilkenny.
As the scheme was extended to landlords this year, they can also claim tax relief on the cost of refurbishing a rented property.
In this case, the relief - which is given to landlords and owners of certain commercial properties in the form of a capital allowance - is claimed over seven years.
There is another scheme that offers tax breaks to the owners of historic homes - however, you must allow public access to your property to be eligible for it.
Under Section 482 of the Taxes Consolidation Act 1997, tax relief from income tax or corporation tax is available to the owners of certain historic homes or gardens for expenditure incurred when repairing, maintaining or restoring their properties.
"Reasonable" access (of typically 60 days a year) to the building or garden must be given to the public - unless it is in use as a registered guest house for at least six months a year.
The Government is reviewing this scheme so it may be discontinued - or replaced with loans or grants. The review is examining whether Section 482 tax relief is the best way to help the Government achieve its aim of preserving historic homes - or if funding should be granted instead. A public consultation was launched last February and the submissions are being assessed. In 2009, the Commission on Taxation recommended this scheme be discontinued.
No matter how tempted you are by tax breaks, don't take on a historic home lightly - as the renovation bill could run into tens of millions.
Many historic homes are listed buildings. "When you take on a listed building, you are obliged to ensure your building doesn't become endangered through damage or neglect," said Michael Brennan, business development area manager with Ecclesiastical Insurance, which specialises in insurance for historic homes.
"If such a building becomes damaged, the local authority will want it restored to its former glory. Costs can start to spiral quite quickly when you're restoring an old home."
Hire a specialist architect or surveyor before buying, Brennan advises. "If you hire a standard surveyor or assessor, you could run into trouble," he said.
"You need to be especially aware of the condition of the building. It could have stone and brick walls and a lot of internal architecture. You could discover there's mould in the walls or damage to the roof. A lot of older buildings have old pipes which may need to be replaced with something new and modern. Once you've bought the building, you are legally obliged to maintain it."
As always with property, buyer beware.
Sunday Indo Business