Claiming tax relief on home renovation costs won’t be as easy as hoped for
New scheme applies only to your home residence or to a house you intend to move into – and make sure to be attentive to the small print
The relief is payable over the two years following the year in which the work is carried out and paid for and is consistent with a delayed bonus, split 50:50 over two years
It was one of the few bright points of last October’s budget, and for many people, availing of the new home renovation tax relief will be on the agenda for 2014. However, if you’re hoping to avail of the scheme to get a 13.5 per cent discount on work in your home, it’s time to read the small print.
While the discount might be attractive, the method of claiming it back may negate its benefits.
Tell me again what I’m entitled to?
The scheme allows you to claim back VAT incurred on home renovations, which in effect means a 13.5 per cent discount on everything from getting your kitchen painted to your garden landscaped.
All work that costs between €5,000 inclusive of VAT* and €30,000 is eligible, so the minimum you can claim back is €595, while the maximum is €4,050. If you spend €6,000 on a new bathroom for example, you will be able to claim back €713 against your tax.
You can only claim the relief on renovations carried out on your home – or principal private residence (PPR) in tax parlance – and you will also have to have paid your property tax to qualify.
Alternatively, you can claim relief on a home you own but do not yet live in – provided that you move in once the works are completed. So, the scheme is no good to you if you’re thinking of getting your holiday home or rental property upgraded.
The relief started on October 25th and is due to end on December 31st, 2015, but if you get your planning permission before this, the scheme will apply until March 31st, 2016.
According to chartered surveyor Patricia Power, who is appearing on television in RTÉ’s Room to Improve, she has seen a “definite general interest in inquiries” since the launch of the scheme.
“Everyone is keen and we have been given a good positive feedback,” she says, although notes that as of yet, it’s been more a case of a bonus for clients who were doing the work anyway, rather than incentivising people to go and get it done.
What renovations qualify?
According to the Revenue, a wide range of works qualify for the relief. These include: painting and decorating; rewiring; extensions; garages; attic conversion; supply and fitting of kitchens; bathrooms and built-in wardrobes; window fitting; septic tank repair or replacement; driveways and plastering.
If you have something in mind that you would like to get done, but doesn’t fit into these categories, you can contact your local Revenue office first to check if it’s eligible for the scheme. Typically, however, you won’t be able to claim relief on anything that is subject to VAT at 23 per cent – so carpets, furniture, architects’ fees and white goods for example.
There are also some points to watch out for. For example, if you buy a kitchen and get it fitted separately the cost of fitting (which incurs a VAT rate of 13.5 per cent) will be eligible for the scheme but the kitchen itself won’t be.
On the other hand, if you get a contractor to supply and install the kitchen units, it will qualify provided that, in accordance with the “two-thirds rule”, the cost of the kitchen units do not exceed two-thirds of the overall cost.
When will I get the money back?
The relief is payable over the two years following the year in which the work is carried out and paid for. “It’s very much a delayed bonus, split 50:50 over two years,” notes Power.