We all want to make our house a home, but the fact is building your dream home doesn’t always come cheap. If you’ve made any renovations, repairs or improvements to your home in the last 4 years, you might be interested to know that there’s a scheme that allows you to claim a tax rebate on expenditures for this kind of work…
The Home Renovation Incentive is a scheme that provides tax relief for home-owners and non-corporate landlords. Introduced in 2014, the scheme allows for tax relief in the form of a 13.5% income tax credit on qualifying improvement works, repairs and renovations on a main home or rental property. Although the scheme has now been scrapped, you can still claim if you’ve had work done in the past 4 years.
The Home Renovation Incentive (aka the HRI) applies to home-owners, local authority tenants and landlords who are carrying out work on their main home or their rental property, so long as they’re paying income tax under PAYE or self-assessment.
HRI? Never heard of it…
If you’ve never heard of the HRI, you’re not alone. In fact, a recent survey issued by Taxback.com showed that only 34.2% of people were familiar with the HRI.
But why is that so shocking? Well, renovations and home repairs can be costly and that’s why it’s important for the average person to know where they stand when it comes to claiming tax back on these repairs and improvements, and who doesn’t want more cash in their pocket?
Depending on what kind of changes you’re making to your home, you may be eligible for this relief. If you’re unsure if you qualify then it’s best to look into it anyway because believe it or not, you can receive a tax refund for something as seemingly minor as installing a new stove in your home, as far back as 4 years!
What’s the catch?
There is none! The only criteria that you must meet to claim under the HRI scheme is as follows;
- The renovations must be carried out by a VAT, RCT and ROS registered, fully tax-compliant contractor. Failing to use a qualifying contractor means you won’t be able to claim your tax credit.
- You’re eligible to claim tax relief on home renovations as long the total expenditure amounts to a minimum of €4,405 (before VAT at 13.5%) or a maximum of €30,000 (before VAT) per property. If your expenditures surpass the 30k mark, you can still claim for that amount but no more. So if you spend 100k, you can only claim for 30k.
- There are also restrictions regarding dates. For homeowners, the incentive covers work carried out and paid for in full, from the 25th of October 2013 until the 31st of December 2018. For local authority tenants between the 1st of January 2017 and the 31st of December 2018. For landlords, it applies to work carried out and paid in full, from the 15th of October 2014 up to the 31st of December 2018.
- There is one exception to the closing date; if you require planning permission for the work, it must be in place by the 31st of December 2018. You then have until the 31st of March 2019 to complete and pay for the work.
Oh, and one more thing, you need to make sure your LPT or local property tax payments are up to date (This rule doesn't apply to local authority tenants).
Want to claim your HRI tax refund?
What is and isn’t covered?
The incentive includes extensions, garages, attic conversions, heating systems, kitchens, bathroom upgrades, insulation, solar panels, driveways, window and wardrobe fitting, plumbing, rewiring, painting & decorating, plastering and tiling.
It does not include items charged at a VAT rate of 23%. This includes items like fridges, hobs, ovens, domestic appliances, sinks, extractor fans, taps, carpets and anything spent on holiday homes, new builds or the renovation of uninhabitable homes that must be reconstructed and refurbished.
If you received a grant like say the Better Energy Homes or a traditional building grant to help fund the work, you will still qualify for the tax credit, but the qualifying expenditure is reduced by 3 times the amount of the grant.
How do I know if my contractor is qualified?
Some businesses such as Cash and Carry Kitchens provide information on their websites stating their HRI compliance but if you’re hiring an independent contractor you’ll have to look into their status. Currently, there is no definitive list of qualified contractors but there is a way to check if your contractor is HRI qualified. Simply visit HRI online and check the work details the contractor entered. If you see their details online, you know they’re qualified.
When should I expect to receive my tax refund and how much will I get?
The amount of HRI tax credit you receive will depend on the amount you’ve spent on qualifying renovations, repairs or improvements.
Say you decide to extend and renovate your kitchen. The kitchen costs €4,500 excluding appliances (furniture, sinks, extractor fan, fridge or any other 23% VAT items) costing €1,500. This means your HRI qualifying spend on your new kitchen costs €3,000 excluding 13.5% VAT. Other qualifying works in your home come to €2,000 excluding 13.5% VAT. This might be your electrical work, plastering etc.
The qualifying HRI spend excluding 13.5% VAT = €5,000
So what do you get back?
You’ll receive a tax credit of €675. In theory, your renovation only cost €4,325 after you receive your rebate.
ARC Heating and Plumbing Services provide examples of what tax credit figure you can expect back based on what you’ve spent:
If the work costs a total of €11,350 including 13.5% VAT and €10,000 before VAT, you’ll receive a tax credit worth €1,350 which is the minimum amount reclaimable.
If you spend €50,000 including VAT, you’ll receive a refund of €4,050 – Keep in mind the maximum amount on which you can receive a refund is €30,000 so even if you spend more you will still receive a maximum refund of €4,050.
Generally, the tax credit is payable by the Revenue on income tax paid over the two years following the year in which you carried out and paid for the work.
So, what are you waiting for?
If you’re a homeowner or a landlord who’s carried out work on your property, you could be due a juicy tax refund!
Why not get in touch with us today and find out how much you might be owed?
Want to claim your HRI tax refund?