Coveney's scheme to help house hunters is full of holes and will only push up prices
The Government's new help-to-buy scheme for first-time buyers is full of holes. Under the new scheme, announced in the Budget, Housing Minister Simon Coveney promised income tax rebates on the purchase of new homes.
It provides first-time buyers with a rebate of income tax paid over the previous four tax years, up to 5pc of the purchase price of a new home, to a value of €400,000.
The maximum tax rebate available to first-time buyers will be €20,000. The scheme applies to homes up to the value of €600,000, but not beyond that, and the most you can get is €20,000.
It is nothing short of extraordinary that the scheme applies to houses at up to €600,000.
The rebate will mean that instead of having to save a deposit of €58,000 for a €400,000 house, a buyer will only have to save €38,000.
Anyone who knows anything about property believes that this will simply push up prices, with the extra profit margin being swallowed up by builders.
And to complicate matters, buyers will have to file a tax return for the previous four years to get the income tax rebate.
This will inevitably make the scheme less attractive.
Revenue confirmed that people who pay their taxes through the pay as you earn (PAYE) system will have to prove they are fully tax-compliant.
THEY will have to register with the tax authority's personal tax portal, MyAccount.ie, and to prove they are fully tax-compliant they will have to file an income tax return for the past four years.
Asked about this, Revenue said PAYE taxpayers may be in receipt of additional income from other sources, such as rental income or share options, which is below the threshold at which they are required to register for income tax - currently gross income of €50,000 or net profit of €5,000.
Or they may have unclaimed health or other expenses which would not be accounted for in their employer's calculation of their taxes.
"Taxpayers who have not already done so will need to complete Online Forms 12 (PAYE) and Forms 11 (self-assessed), in respect of each of these four years," Revenue said.
The announcement of the new scheme prompted a surge in searchers on the property website Daft.ie.
The website recorded an increase of 130pc in searches for new homes after details of the scheme were announced in the Budget when compared with the average daily searches for new homes.
The problem is there is precious little for sale in the new-homes category anywhere in the country.
The Institute of Certified Public Accountants in Ireland (CPA Ireland) has also expressed concern that talented Irish people living abroad will not be able to avail of the new scheme.
This means a significant cohort of people - returning emigrants - will miss out.
However, one good aspect of the scheme is that the tax rebate may be subject to a clawback.
Revenue said the property must be occupied by the first-time buyer for five years from the date that it is habitable.