Know Your Rights: Home Renovation Incentive Scheme

Question

My partner and I own our home and want to extend it this year. Would we qualify for a tax credit for the work, and if so, how do we apply?

Answer (May 2018)

The Home Renovation Incentive (HRI) scheme lets homeowners, landlords and local authority tenants claim tax relief on the cost of repairs, renovations or improvement works carried out on their main home or rental property.

To qualify for the HRI, you must be paying income tax and be up to date with your Local Property Tax (LPT). The work must be carried out by a contractor who is registered for Value Added Tax (VAT) and is tax-compliant.

Any repair, renovation or improvement work subject to VAT at 13.5% qualifies for the scheme, so your proposed extension would be covered. Work that is subject to VAT at 23% (such as architect’s fees) is not covered. Neither are items such as furniture, white goods or carpets.
The HRI is paid as a tax credit at 13.5% of the cost, effectively reducing the rate of VAT on qualifying work to zero. The qualifying work must cost at least €4,405 before VAT at 13.5% (€5,000 including VAT). The credit can be claimed up to a maximum of €30,000 (before VAT) of the total cost of works.

The work must be carried out and paid for before 31 December 2018. However, this can be extended if you need planning permission. If this is the case, planning permission must be in place by 31 December 2018. You will then have until 31 March 2019 to complete the work.

To apply for the HRI, your contractor(s) must enter details of the work and payments on the HRI online system on revenue.ie. You should access the system to check that these details have been entered correctly. You claim the credit after the end of the tax year in which you have the work done. In general, the tax credit is applied over the two years following the year in which the work is carried out and paid for.

Read more about the Home Renovation Incentive Scheme.