When the Budget was announced last October, it’s fair to say that people didn’t have a lot to look forward to in it.
One definite positive was the new home renovation tax relief, which offers people savings of 13.5% for work in their homes.
Here MyHome gives a breakdown of who is eligible and how to apply.
You can also find a list of contractors who will help you with the work and the process of claiming the tax relief in the MyHome Services Guide.
What are you entitled to?
The scheme allows you to claim back VAT incurred on home renovations, which in effect means a 13.5% discount on everything from getting your kitchen painted to your garden landscaped.
All work that costs between €5,000 (€5,675 including VAT) and €30,000 is eligible, so the minimum you can claim back is €595, while the maximum is €4,050.
You can only claim the relief on renovations carried out on your home – or principal private residence (PPR) in tax terms – while you must also have paid your property tax in order to qualify.
Alternatively, you can claim relief on a home you own but do not live in, providing that you move in once the works are complete.
This effectively means that the tax relief is no good for those hoping to do up a rental property they own or a holiday home.
While most people will only be looking at claiming the relief now, it actually came into force on October 25th last and is available until December 31st 2015.
If planning permission is granted before this, the scheme will apply until March 31st 2016.
What renovations qualify?
A wide range of works qualify for the relief according to the Revenue Commissioners. These include: painting and decorating; rewiring; extensions; garages; attic conversions; supply and fitting of kitchens; bathrooms and built-in wardrobes; window fitting; septic tank repair or replacement; driveways and plastering.
Anything that is subject to VAT at 23%, such as carpets, furniture and architects’ fees will not be eligible though.
If you have a query about a job that may or may not be eligible you are encouraged to contact your local Revenue office to check if you qualify.
A recent article by journalist Fiona Reddan in The Irish Times warned of some things you need to watch out for though. For example, if you buy a kitchen and get it fitted separately the cost of fitting (which incurs a VAT rate of 13.5%) 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 acceptance with the “two-thirds rule”, the cost of the kitchen units do not exceed two-thirds of the overall cost.
When will I get my money back?
The relief is payable over the two years following the year in which the work is carried out and paid for.
You won’t be able to make a claim – or have your contractor do it for you – until April 2014 at the earliest, regardless of when you get the work done.
If you get the work done this month, for example, and claim for it in April, then the relief will apply on a 50:50 basis in 2015 and 2016. If you are a PAYE employee, the credit will be divided equally across your pay dates each year.
Does work need to be carried out by a contractor?
There is no obligation under the scheme to get all the work carried out by one contractor.
If you have several smaller jobs that you want to get done you will still qualify, as long as the total cost of the qualifying work exceeds €5,000 (excluding VAT) over the course of a year.
Can I claim a tax credit and receive an SEAI grant?
Yes you can, but not the full cost of the project.
According to Revenue, you will be able to claim twice on eligible work – such as installing a new boiler and heat controls for example – but any grant you receive will be disregarded from the qualifying amount by a multiple of three. So, for example, if you spend €10,000 on external wall insulation, you will be entitled to a grant of €2,700.
This means that you will only be entitled to claim VAT relief on €1,900 ((€2,700 x 3)-€10,000). So the total cost of the insulation to you would be €7,043, once VAT relief (€256) is factored in.
Similarly, if you receive an insurance payment which you put towards the cost of an upgrade, the full amount of this payment will be disallowed.
How do I find a contractor?
One of the main points of the renovation scheme is to bring contractors fully into the tax net, which means that you will only be eligible for the tax relief if the contractor meets the Revenue’s requirements.
This means that they will need to show you evidence of their VAT registration and tax compliance, which involves giving you evidence of their business name and VAT number. In addition, they must give you a current “relevant contracts tax (RCT)” rate notification; and a current tax clearance certificate, which will show a “valid until” date.
You can find a list of contractors in the MyHome services guide.
How can I make a claim?
The key to remember with the scheme is that it’s not up to you to submit a claim – it’s up to your contractor. So if you get new windows fitted, for example, it will be up to the window supplier to notify Revenue and fill out the related paperwork.
Similarly, if you get a house rewired, you will need the electrician to contact Revenue on your behalf. All you have to do is keep a copy of any relevant paperwork and pass on your local property tax details to the contractor as verification that this tax is up to date.
Further details on the scheme can be found on the Revenue Commissioners' website here.
A breakdown of estimated costs from the Society of Chartered Surveyors Ireland on the potential renovation costs and savings from the scheme
