Irish homeowners have spent a total of €1.2bn through the Home Renovation Incentive (HRI) Scheme since its launch in 2013.
The scheme was set up to provide tax relief on approved expenditure on repair, renovation or improvement works carried out on a main home or rental property by qualified contractors.
The scheme contributed to €4bn being spent by Irish homeowners in 2016.
Construction Industry Federation (CIF) director general Tom Parlon said the incentive may have "kept many thousands of construction workers, tradespeople and companies afloat during the recession".
The HRI cost the Exchequer €85m, but Mr Parlon said the scheme supported more than €10bn of work by homeowners since 2014. "Homeowners might otherwise not have spent this money or it may have been spent in the grey market at a great loss to the Exchequer," he said.
The incentive facilitated homeowners in carrying out nearly 77,000 home improvement projects over the past three years with an average spend of €16,000 a project.
Mr Parlon said the scheme had been invaluable for employment in the industry.
"This money is recycled into the local community by the 9,000-plus domestic contractors involved in delivering renovation construction across Ireland.
"These businesses employ a good proportion of the 140,000 people engaged in construction in Ireland," he said.
The scheme has been extended until December 31 next year for homeowners looking to renovate, repair or improve their property.