Revenue Note for Guidance

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Revenue Note for Guidance

477C Help to Buy

Summary

This section is designed to provide income tax relief to assist first-time buyers with obtaining the deposit required to purchase or build their first home.

Broadly, the relief takes the form of a refund of income tax, including DIRT, paid over the four tax years prior to making an application for the refund. However, it will be open to Help to Buy (HTB) claimants to select all or any of the previous 4 tax years for the purposes of calculating the HTB refund.

The maximum refund will be calculated at the lower of:

  1. €20,000,
  2. income tax and DIRT paid in the previous 4 years, or
  3. 5% of the purchase price, or valuation in the case of a self-build, up to a maximum of €500,000 (€600,000 maximum where, in the period from 19 July 2016 to 31 December 2016, a contract for the purchase of a new house has been entered into, or in the case of a self-build, the first tranche of a qualifying loan is drawn down by the claimant).

The section provides for the registration of contractors with the Revenue Commissioners for participation in the incentive and for clawback provisions in certain circumstances.

This provision applies in respect of qualifying properties in the period commencing 19 July 2016 and ending 31 December 2021.

Details

Definitions

(1) “appropriate payment” is the term given to the HTB refund.

“appropriate tax” has the meaning assigned to it by section 256.

“approved valuation” is only relevant to a self-build qualifying residence. It is the valuation of the self-build at the time the loan is entered into with a qualifying lender and approved by the qualifying lender.

“first-time purchaser” means an individual who, at the time of a claim, has not, either individually or jointly with any other person, previously purchased or built a dwelling.

“income tax payable” has the meaning assigned to it by section 3.

“loan” means any loan or advance, or any other arrangement whatever, by virtue of which interest is paid or payable.

“loan-to-value ratio” means the amount of the qualifying loan as a proportion of the purchase price of the qualifying residence or the approved valuation of a self-build qualifying residence.

“PPS number” means an individual's personal public service number.

“purchase value” means—

  1. the price paid for a qualifying residence, which is not less than the market value, or
  2. the approved valuation of a self-build qualifying residence.

“qualifying contractor” has the meaning assigned to it by subsection (2).

“qualifying lender” has the meaning assigned to it by section 244A(3)

“qualifying loan” means a loan which—

  1. is used by the first-time purchaser wholly and exclusively for–
    1. the purchase of a qualifying residence, or
    2. the provision of a self-build qualifying residence (including the acquisition of land required for its construction),
  2. is entered into solely between a first-time purchaser and a qualifying lender, (but does not exclude a loan to which a guarantor is a party), and
  3. is secured by a mortgage.

“qualifying period” means the period commencing on 19 July 2016 and ending on 31 December 2021.

“qualifying residence” means –

  1. a new building which was not, at any time, used, or suitable for use, as a dwelling, or
  2. a building which was not, at any time, in whole or in part, used, or suitable for use, as a dwelling and which has been converted for use as a dwelling,

and—

  1. which is occupied as the sole or main residence of a first-time purchaser,
  2. in respect of which the construction work is subject to 13.5% VAT, and
  3. where the purchase value is not greater than –
    1. €600,000 where, in the period from 19 July 2016 to 31 December 2016, a contract for the purchase of a new house has been entered into, or in the case of a self-build, the first tranche of a qualifying loan is drawn down by the claimant, and
    2. €500,000 in all other cases.

“relevant tax year” means a year of assessment within the 4 tax years immediately preceding the year in which an application for a repayment is made by an individual.

“Revenue officer” means an officer of the Revenue Commissioners.

“self-build qualifying residence” means a qualifying residence which is built, directly or indirectly, by a first-time purchaser on his or her own behalf.

“tax reference number” means in the case of an individual, the individual's PPS number or in the case of a company, the reference number stated on any return of income form or notice of assessment issued to that company by the Revenue Commissioners.

“tax year” means a year of assessment within the meaning of the Tax Acts.

“VAT registration number” in relation to a person, means the registration number assigned to the person under section 65 of the Value-Added Tax Consolidation Act 2010.

(2)(a) A “qualifying contractor” means a person who applies to the Revenue Commissioners for registration as a qualifying contractor and who the Revenue Commissioners are satisfied is entitled to register and who satisfies the conditions set out in section 530G or 530H of the Taxes Consolidation Act i.e. is a zero rated or 20% rated contractor,

(2)(b) who holds an up- to- date tax clearance certificate in accordance with section 1095 of the Taxes Consolidation Act 1997, and

(2)(c) who provides to the Revenue Commissioners,

  1. details of the qualifying residences which the contractor offers, or proposes to offer, for sale within the qualifying period,
  2. details of any planning permission sought in respect of the qualifying residences,
  3. details of freehold or leasehold estate or interest in the land on which the qualifying residences are constructed or to be constructed, and
  4. any other relevant information that may be required by the Revenue Commissioners for the purposes of registration of the person as a qualifying contractor.

(3) An individual may make a claim for an appropriate payment (i.e. HTB refund) where, in the qualifying period,

  1. he or she has entered into a contract with a qualifying contractor for the purchase of a qualifying residence, that is not a self-build, or
  2. in the case of a self-build, he or she has draw down the first tranche of a qualifying loan for that individual's qualifying residence.

(4) On making a claim for a HTB refund, in this section referred to as an “appropriate payment”, payment will be made in accordance with subsection (16).

(5)(a)&(b) The appropriate payment will be capped at the lower of:

  1. €20,000,
  2. income tax and DIRT paid in the previous 4 years, or
  3. 5% of the purchase price, or valuation in the case of a self-build, up to a maximum of €500,000 (€600,000 maximum where, in the period from 19 July 2016 to 31 December 2016, a contract for the purchase of a new house has been entered into, or in the case of a self-build, the first tranche of a qualifying loan is drawn down by the claimant).

(5)(c) The figure for DIRT under subsection 5(b) shall be reduced by any amount of DIRT repaid under section 266A (which provides for a refund of DIRT for first-time buyers of both new and 2nd hand dwellings).

(5)(d) In the case of jointly assessed individuals, the amount of income tax paid by each individual will be determined by reference to the total income of each individual as a proportion of the combined total income of both individuals. The amount will be determined by the following formula:

A×C

B

Where –

A is the amount of total income (if any) of the claimant for a tax year,

B is the sum of the amount of the total income (if any) of the claimant and the amount of the total income (if any) of the claimant's spouse or civil partner, and

C is the amount of income tax paid for a tax year.

(5)(e) Commencing with the earliest of the 4 years selected by the claimant, the appropriate payment will firstly involve a refund of income tax and subsequently, commencing with the earliest of the 4 years selected by the claimant, a refund of DIRT.

(6)(a) Before submitting a claim under subsection (3) an individual must make an application to the Revenue Commissioners which will include –

  1. an indication that he or she intends to make a claim under this section,
  2. his or her name and PPS number, and
  3. confirmation by the individual that the conditions specified in subsection (6)(b) have been met.

The conditions referred to in subsection (6)(a)(iii) are that:

  1. he or she is a first time buyer,
  2. where the individual is a chargeable person for any of the 4 years immediately preceding the year in which the application is made, he or she has completed tax return forms and is tax compliant for each such year,
  3. where the individual is not a chargeable person for any of the 4 years immediately preceding the year in which the application is made, he or she has completed a tax return form and is tax compliant for each such year as selected by the individual for the purposes of calculating the HTB refund, and
  4. in the case of a chargeable person for any of the 4 tax years immediately preceding the year in which the application is made, he or she has been issued with a tax clearance certificate and such certificate has not been rescinded.

(6)(c) In joint assessed cases, the person who must comply with the conditions referred to in paragraphs (b)(ii) and (iii) (i.e. file returns and pay all income tax and USC due) is the assessable spouse or the nominated civil partner.

(7)(a)(i) If, in the period from 19 July 2016 to 31 December 2016, an individual enters into a contract to purchase a qualifying residence or draws down the first tranche of a qualifying loan (in the case of a self-build), he or she may elect to be deemed to have made his or her HTB application in the tax year 2016 but only where the application is made on or before 31 March 2017.

(7)(a)(ii) If in the period commencing on 1 January and ending on 31 March 2017, an individual enters into a contract to purchase a qualifying residence or draws down the first tranche of a qualifying loan (in the case of a self-build), he or she may elect to be deemed to have made his or her HTB application in 2016 but only where the application is made on or before 31 May 2017.

Where an individual makes an election under paragraphs (a)(i) or (ii), the application will be deemed to have been made in 2016 and the corresponding claim, if made in 2017, will also be deemed to have been made in 2016.

(7)(b) Notwithstanding the obligation on an individual under paragraph (a)(i) to, as appropriate, make an application on or before 31 March 2017, where such an individual makes an application in 2018 or 2019, the application shall be deemed to have been made in the tax year 2017, and the corresponding claim will also be deemed to have been made in the tax year 2017.

(8)(a) An application under subsection (6) shall cease to be valid in certain circumstances. Those circumstances are the earlier of:

  1. failure by an individual to satisfy the conditions specified in subsection (6)(b),
  2. where an applicant's tax clearance certificate is rescinded, or
  3. on 31 December in the tax year in which the application is made.

(8)(b) Where an application is made between 1 October and 31 December in any of the tax years 2017 to 2021 there is some flexibility around the making of a claim. In such cases, where the corresponding claim is made between 1 January and 31 March of the following year, the claim will be deemed to be made in the prior year.

(8)(c) No claim can be made on foot of an application which ceases to be valid in accordance with subsection (8)(a).

(9) There are obligations on each party, where there is more than one party to a claim, which are –

  1. confirm that he or she is a first time buyer,
  2. satisfy the conditions specified in subsection (6)(b),
  3. consent to provide to the other parties his or her name, address and PPS number, and
  4. agree with each of the other parties as to the allocation between the parties of the amount of the appropriate payment and notify the Revenue Commissioners of such allocation.

(10) Revenue will notify the applicant of the maximum appropriate payment available to, or in respect of, the applicant subject to all necessary conditions of the incentive being met.

(11) The minimum loan-to-value ratio is 70%.

(12)(a) The information that a claimant is required to submit to Revenue when making a claim in respect of a qualifying residence other than a self-build is –

  1. his or her name and PPS number,
  2. the address of the qualifying residence,
  3. the purchase value of the qualifying residence,
  4. details of the qualifying lender,
  5. confirmation that a qualifying loan has been entered into,
  6. the qualifying loan application number or reference number used by the qualifying lender,
  7. the amount of the qualifying loan,
  8. evidence of the qualifying loan entered into,
  9. evidence of the contract entered into with a qualifying
  10. the amount of deposit payable by the claimant to the qualifying contractor,
  11. the amount, if any, of deposit paid by the claimant to the qualifying contractor,
  12. confirmation that, on its completion, the qualifying residence will be occupied by the claimant as his or her only or main residence, and
  13. details of the claimant's bank account where in the period
    1. from 19 July 2016 to 31 December 2016, a contract for the purchase of a new house has been entered into, or in the case of a self-build, the first tranche of a qualifying loan is drawn down by the claimant.

(12)(b) A claimant must satisfy himself or herself that the contractor is a qualifying contractor.

(13) Following a claim under subsection (12), a qualifying contractor is required to submit certain information to the Revenue Commissioners, which is –

  1. the contractor's name
  2. the contractor's tax reference number and VAT registration number,
  3. the name of the claimant,
  4. the address of the qualifying residence,
  5. the purchase value of the qualifying residence,
  6. the amount of deposit payable by the claimant to the qualifying contractor,
  7. the amount, if any, of deposit paid by the claimant to the qualifying contractor, and
  8. details of the qualifying contractor's bank account (where a contract to purchase a qualifying residence is entered into between 1 January 2017 and 31 December 2021).

(14) Following the making of a claim in respect of a self-build qualifying residence, a claimant is required to submit certain information to the Revenue Commissioners which is –

  1. his or her name and PPS number,
  2. the address of the self-build qualifying residence,
  3. the purchase value of the self-build qualifying residence,
  4. details of the qualifying lender,
  5. confirmation that a qualifying loan has been entered into,
  6. the amount of the qualifying loan,
  7. confirmation that, on its completion, the self-build qualifying residence will be occupied by the claimant as his or her only or main residence, and
  8. details of the qualifying loan bank account.

Following the making of a claim under subsection (14), a solicitor, acting on behalf of the claimant, is required to submit certain information to the Revenue Commissioners, which is –

  1. the name of the claimant,
  2. the address of the self-build qualifying residence,
  3. evidence of the qualifying loan entered into between the claimant and the qualifying lender,
  4. evidence of the drawdown of the first tranche of the qualifying loan, and
  5. confirmation of the purchase value of the self-build qualifying residence.

(16)(a) This subsection sets out to whom the appropriate payment will be made by the Revenue Commissioners. The party to which payment will be made will depend on the timing of the claim and whether or not the property is a qualifying residence or a self-build qualifying residence.

  1. payment will be made directly to the claimant where, in the period from 19 July 2016 to 31 December 2016, a contract for the purchase of a qualifying residence is entered into, or in the case of a self-build, the first tranche of a qualifying loan is drawn down by the claimant,
  2. payment will be made directly to the contractor where, in the period from 1 January 2017 to 31 December 2021, a contract for the purchase of a qualifying residence is entered into,
  3. payment will be made directly to the claimant's qualifying loan bank account where, in the period from 1 January 2017 to 31 December 2021, the first tranche of the qualifying loan is drawn down by the claimant (in the case of a self-build).

(16)(b) Where an appropriate repayment is made in respect of a claimant to a qualifying contractor, the contractor must treat the appropriate repayment as a credit against the purchase price of the qualifying residence.

(16)(c) As appropriate, a claimant must consent to the appropriate payment being made to the qualifying contractor.

(17)(a) On completion, a qualifying residence must be occupied by the claimant as his or her only or main residence.

(17)(b)(i) A clawback of the appropriate payment, or part thereof, will apply where the qualifying residence ceases to be occupied within 5 years of the occupation of the residence by the claimant. Where more than one individual is a party to the claim, no clawback will apply where at least one of the purchasers continues to occupy the qualifying residence. The claimant must notify the Revenue Commissioners where occupation ceases.

(17)(b)(ii) The appropriate payment must be paid to the Revenue Commissioners within 3 months from the date the residence ceases to be occupied. The rate of clawback depends on the year in which the dwelling ceases to be occupied.

Year Occupation Ceases

Rate of clawback of the appropriate payment

1

100%

2

80%

3

60%

4

40%

5

20%

(18)(a) There will be a clawback of an appropriate payment, or part thereof, where it transpires that a claimant was not entitled to it.

In such circumstances, the appropriate payment, or part thereof, must be repaid to the Revenue Commissioners within 3 months from the date on which the appropriate payment is made.

(18)(b)(i) There will be a clawback from the claimant of the full amount of the appropriate payment in respect of a self-build qualifying residence where –

  1. the self-build residence is not completed within 2 years from the date on which the appropriate payment was made, or
  2. if within that 2 year period, the Revenue Commissioners have reasonable grounds to believe that the self-build qualifying residence will not be completed within that period.

(18)(b)(ii) Payment of the clawback by the claimant in respect of a self-build qualifying residence shall be made to the Revenue Commissioners within 3 months from the end of the 2 year period referred to in subsection (18)(b)(i)(I) or within 3 months of the Revenue Commissioners issuing notice to the individual that they have formed an opinion in accordance with subsection 18(b)(i)(II).

(18)(c)(i) There will be a clawback of the appropriate payment from the claimant in the case of the purchase of a qualifying residence in the period from 19 July 2016 to 31 December 2016 (where the payment is made directly to the claimant) where:

  1. the purchase does not happen within 2 years from the date on which the appropriate payment was made, or
  2. if within that 2 year period, the Revenue Commissioners have reasonable grounds to believe that the purchase will not be completed within that period.

(18)(c)(ii) Payment of the clawback by the claimant referred to in subsection (18)(c)(i) shall be made to the Revenue Commissioners within 3 months from the end of the 2 year period referred to in subsection (18)(c)(i)(I) or within 3 months of the Revenue Commissioners issuing notice to the individual that they have formed an opinion in accordance with subsection (18)(c)(i)(II).

(18)(d)(i) There will be a clawback from the contractor of the full amount of the appropriate payment in the case of an intended purchase of a qualifying residence in the period from 1 January 2017 to 31 December 2021 period where:

  1. the purchase does not happen within 2 years from the date on which the appropriate payment was made, or
  2. if within that 2 year period, the Revenue Commissioners had reasonable grounds to believe that the purchase will not be completed within that period.

(18)(d)(ii) Payment of the clawback from a contractor of the appropriate payment in respect of a qualifying residence shall be made to the Revenue Commissioners within 3 months form the end of the 2 year period referred to in 18(d)(i)(I) or within 3 months of the Revenue Commissioners issuing notice to the individual that they have formed an opinion in accordance with section 18(d)(i)(II).

(18)(e) For the purposes of paragraph (d), an individual may notify the Revenue Commissioners where he or she has reasonable grounds to believe that the purchase of the qualifying residence will not be completed within the required 2 year period.

(18)(f) Where a qualifying residence or a self-build qualifying residence is not completed within the required 2 years, the Revenue Commissioners may extend this period, where they are satisfied that the residence is substantially completed, and is likely to be completed within a reasonable period of time.

(19) Where more that one individual is party to a claim for an appropriate payment and a liability arises in terms of a clawback under subsection (17) or (18), each party to the claim shall be liable jointly and severally in respect of the appropriate payment or part thereof.

(20)(a)to(e) Sets out provisions regarding recovery of an appropriate payment, or part thereof, where the relevant person fails to pay Revenue.

(20)(a) Where a person who is liable to pay to the Revenue Commissioners an appropriate payment, or part thereof, fails to pay that amount, a Revenue officer may make an assessment or an amended assessment on that person.

(20)(b) A person aggrieved by an assessment or an amended assessment may appeal the assessment or the amended assessment to the Appeal Commissioners within the period of 30 days after the date of the notice of assessment or amended assessment.

(20)(c) Where a Revenue officer makes an assessment or an amended assessment on a person in an amount that, according to the best of that officer's judgement, ought to be charged on that person, the amount so charged shall, for the purposes of paragraph (a) and Part 42 (Collection and Recovery), be deemed to be tax due and payable in respect of the tax year in which the person is liable to pay the amount involved to the Revenue Commissioners. The amount due shall carry interest as determined in accordance with section 1080(2), with interest applying from the date the tax becomes due and payable to the Revenue Commissioners.

(20)(d) Any liability arising under this subsection and unpaid by a qualifying contractor shall be and remain a charge on the freehold or leasehold estate or interest in the land on which the qualifying residence was to be constructed but only where the contractor retains such estate or interest in the land.

(20)(e) The charge on the estate or land under subsection (d) is not subject to the time limits under section 36 of the Statute of Limitations 1957.

(21) A person aggrieved by a decision by the Revenue Commissioners to refuse a claim for HTB may appeal to the Appeal Commissioners within a period of 30 days of the notice of the decision.

(22) Anything required to be done under this section by the Revenue Commissioners may be done by any Revenue officer.

(23) Any application, claim, information, confirmation, declaration or documentation required by this section shall be given by electronic means and through such electronic systems as the Revenue Commissioners may make available for the time being for any such purpose.

(24) Section 1021 of the Taxes Consolidation Act 1997 will not apply to a refund under this section, so that, in the case of a jointly assessed couple, an appropriate payment claimed solely by one of them will not be split between them.

(25) No application or claim may be made after 31 December 2021.

Relevant Date: Finance Act 2019