Budget 2017: First-time buyers to receive income tax rebate

First-time house buyers in Ireland will benefit from an income tax rebate of up to €20,000 to help fund their deposit.

Finance Minister Michael Noonan announced the new Help-to-Buy Scheme as he introduced Budget 2017.

The rebate only applies to purchases of new houses valued less than €600,000, which Mr Noonan said would stimulate housebuilding.

Mr Noonan said there is “an acute shortage of new houses being built in Ireland” and the new scheme would “address this problem”.

He added: “In all markets, supply increases to meet demand and the Help to Buy Scheme will increase the demand for newly built houses by assisting first time buyers to put a deposit together.

“I expect the building industry to meet this additional demand by increasing the supply of new affordable homes.

He explained that the scheme will provide a rebate of income tax paid over the previous four tax years up to a maximum of 5 per cent of the purchase price of a new home up to a value of €400,000.

Pro rata rates will apply to lower priced houses and a full rebate calculated on €400,000 will also apply to houses in excess of €400,000 and up to €600,000.

No rebate will be paid on house purchases in excess of €600,000.

Mr Noonan added: “I have discussed the proposed scheme with the Governor of the Central Bank and he has agreed that any rebate received under the scheme will be reckoned in full in the calculation of the deposit required to be eligible for a mortgage under the Central Bank’s macro-prudential rules.

“The Scheme will apply to the purchase of newly built primary residences by first time buyers from the 19th of July this year until the end of 2019.”