How do I get the tax rebate under the help-to-buy scheme? Is the money sent to me by cheque or is it sent directly to the bank to go towards my deposit?
Mr D.R., email
With all the attention to who will and will not be eligible for support as a first-time buyer under the help-to-buy scheme, very little focus has yet gone on the scheme’s technical workings.
In part, of course, this is because the legislation is still passing through the Oireachtas and could yet be further amended. Also, it has already been made clear that Revenue will not be handling any applications until January 1st, so it is not seen as an immediate priority.
However, for those looking to get on the housing ladder, getting the finances in order and making sure you know what is coming from where and via what route is clearly important.
Wouldn’t it be nice if we were all to receive a cheque from the Revenue just as we were looking to buy our home? Unfortunately, Revenue tends to like a little bit more control over things. And, as it stands, the Finance Bill lays down very precise rules about to whom any rebate will be paid. To complicate matters, the rules are different depending on a range of circumstances. For anyone with a taste for the legalese of such documents, the nitty gritty can be found in section eight, subsection 16 of the Bill.
Starting first with people who will be buying a new home from a developer or construction company, where the money will be paid is determined by when the house is bought – or, more precisely, when a contract to buy the house is signed.
If that is this year – ie any time between July 19th last and the end of the year, the money will be sent to your bank account. Presumably this is because you will have had to raise/pay the deposit before Revenue opens for applications next year and are therefore deemed to be out of pocket.
If, however, you sign the contract anytime between the start of 2017 and the end of 2019 when the scheme is currently scheduled to expire, the money will be paid into the bank account of the builder/contractor, whose status is also defined within the definitions of the Bill. As part of the application procedure, you will be obliged to consent to this.
For your security, the Bill also obliges the contractor to use the cash received specifically as a credit against the cost of the house and not for any other purpose. Clearly, the intention is that the money is ring-fenced and not used by a builder for any other business reason.
Turning now to people who are building their own home, or having one specifically built for them on a one-off basis, the money will be sent to their normal bank account if they have already drawn down the first tranche of their mortgage before he end of 2016. Again, the logic seems to be that to have secured that mortgage in the first place, you will already have had to satisfy the Central Bank deposit requirements and so this is effectively a refund – like any other tax rebate.
For self-build projects where the first mortgage tranche is drawn down on or after January 1st, 2017, the money will be paid into the specific mortgage loan account set up for the borrowings.
We obviously have not yet seen the application forms that you will be required to fill in to apply to Revenue for the rebate but they will no doubt seek all the relevant bank details among with a fair bit of other information.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to email@example.com. This column is a reader service and is not intended to replace professional advice.