The HRI scheme provides for tax relief for homeowners by way of an income tax credit at 13.5% of qualifying expenditure on repair, renovation or improvements carried out to the homeowner’s main home by qualifying contractors. Relief may be claimed on qualifying expenditure over €4,405 before VAT subject to a maximum spend of €30,000.
The lowest claim amount is €595 (€4,405 @13.5%) and the highest is €4,050 (€30,000 @13.5%). The works may be phased, and multiple payments to different contractors are allowed. Qualifying works must be carried out on or after 25 October 2013 and up to 31 December 2018. The credit is payable over two years following the year in which the work is undertaken.
Unused tax credits may be carried forward to the next tax year.
Homeowners must be LPT compliant. Claims may be made for costs at the 13.5% rate of tax and it excludes anything subject to VAT at 23%.
Contractors must be registered for VAT and RCT compliant. The HRI scheme has been extended to rental properties in the State where properties are refurbished and let to tenants under leases registered with the Private Rental Tenancies Board (PRTB) and occupied within six months of the works being carried out. There are special provisions in place that allow for the conversion of one premise to two rental units. The effect of this is to allow the maximum claim of €4,050, to apply to each unit, although the minimum spend of €5,000 equally applies to each unit.
This incentive is due to expire by 31 December 2018, to that end, it is important that if you are considering complete works to your property that you secure planning permission before 31 December and that the works are fully completed by 31 March 2019. Works completed in 2019 will be deemed to have taken place in 2018.