Escape the rental trap with the Help To Buy Scheme

The government’s stimulus package announced in July 2020 held a welcome surprise for first time buyers: the Help To Buy scheme.

This incentive is a government tax refund scheme that is specifically designed to help first time buyers get the deposit they need to buy a home. 

In total, borrowers can claim up to 10% of the value of a new home or €30,000 depending on which is the lower figure. This is an increase, as the previous Help To Buy scheme operated on a ratio of 5% or an amount of up to €20,000 in total.

Properties valued at €500,000 or less are covered by the scheme

As already mentioned, the scheme is capped at a 10% tax rebate or the maximum amount of €30,000 – whatever is the lower figure.

Strictly speaking, this means that you can purchase a property valued at €300,000 and claim the full rebate amount of €30,000. If you purchase a house valued at €400,000, you can still only claim a maximum rebate of €30,000.

The two tables below illustrate how much you can qualify for now under the new scheme compared to the previous scheme.

The Help To Buy scheme is a tax rebate scheme

It’s important to remember that the Help To Buy scheme is a tax rebate scheme. This means that you must have paid in the same amount of tax that you want to claim. 

Let’s say that you want to claim €15,000 using the Help To Buy scheme to put together a deposit for a property you want to buy. Then, you need to have paid €15,000 in either tax and/or DIRT over the previous four years. 

USC and PRSI are not included in the amount you can claim

This isn’t a problem, as most people who work full-time in Ireland and pay tax will have paid enough funds to benefit positively from the scheme.

Saving for a deposit is STILL a VERY GOOD IDEA

We cannot over exaggerate just how important it is to still save for a deposit.

Yes, qualifying for a Help To Buy scheme rebate of €30,000 theoretically means that you can buy a property for €300,000.

But… it’s almost a 100% guarantee that your bank will want to see that you can manage money well before they feel confident to award you a mortgage. The best way to demonstrate this is through showing consistent savings towards a deposit.

It’s also worth remembering that purchasing a new home includes other costs too. Showing that you have money saved to pay for costs, such as stamp duty and legal fees, will place you in high regard in the bank’s view and make it easier to get a mortgage.

Important dates to remember for the Help To Buy scheme

The new Help To Buy scheme that includes the 10% tax rebate or maximum payment of €30,000 is due to run until 31 December 2020. It’s possible that this scheme may be extended, but no announcement has been made yet.

Even if the scheme is not extended, the previous Help To Buy scheme whereby you could claim up to 5% tax rebate or €20,000 is guaranteed to run until 31 December 2021. This extension was included in the 2020 Budget.

We’d love to help you buy the property of your dreams. Click on the link for more details on the Help To Buy scheme.

Contact us for a confidential chat about purchasing a home. We’d love to hear from you.