Home Owners and Landlords can claim the Relief.
The Home Renovation Incentive Scheme (HRI) allows owner occupiers and landlords who engage tax compliant contractors to carry out qualifying work on residential properties to claim tax relief by way of a tax credit equal to 13.5% of qualifying expenditure.
How much can be claimed?
The property owner must spend a minimum €4,405 net of VAT to qualify for the tax credit. This amount can be made up of a total of an unlimited number of jobs on the property completed and paid for between 25 October 2013 to 31 December 2018 for homeowners and between 15 October 2014 to 31 December 2018 for landlords. The HRI tax credit can only be claimed on amounts up to €30,000 net of VAT. The tax credit can be claimed through HRI online the year after the work is completed.
Requirements Re: Contractors
The property owners must be satisfied that the contractor they engage is registered for VAT, tax compliant, that he or she will record the work and payments with HRI online through the Revenue Online Service (ROS) and that they are participating in the scheme. The property owner should tell the contractor that they intend to apply for the HRI tax credit for the work being done. You should also give the contractor the Property ID and tell them whether the property is a rental property or not.
Registration of Work on HRI Online
The contractor will enter payment details on HRI online. The property owner should access HRI online to check that the work details have been entered before the work starts.
Qualifying Expenditure
The types of work that qualify under the scheme include painting and decorating, rewiring, plastering, tiling, plumbing, fitted kitchens, extensions and attic conversions. The VAT rate on the works carried out must be 13.5%. The purchase of items such as carpets, furniture, fridges that have a VAT rate of 23% does not qualify for relief.
Qualifying Properties
A qualifying property can be:
- A principal private residence that the owner must own and live in
- A second-hand home that has been purchased and will be lived in as a principal private residence after the works have been carried out
- A rental property that, within six months of the completion of the works, must be occupied by a tenant and registered with the Residential Tenancies Board
Example of Relief Calculation
If a property owner pays €3,000 (before VAT) to a HRI qualifying plumber and €1,600 (before VAT) to a HRI qualifying tiler for tiling work on the rental property within the qualifying period, your HRI credit is: €4,600 x 13.5% = €621.
More details on the scheme are available at:
http://www.revenue.ie/en/tax/it/reliefs/hri/
Please contact the author, Timmy O’Donoghue for more details.