Minister for Finance, Michael Noonan, presented the Irish budget for 2014 on Tuesday, October 15th. Amongst the items announced in the budget was the introduction of the new Home Renovation Tax Incentive Scheme. The idea of the Home Renovation Initiative is to motivate domestic renovations and also increase the requirement for construction jobs.
The Incentive will offer tax relief by way of a tax credit at 13.5% of qualifying expenditure to home owners undertaking repair, renovation or improvement work on their primary residence within the next two years. The work must commence on or after 1st January 2014 and be carried out during 2014 or 2015.
This tax credit will be calculated at on spending from €5,000 up to a maximum of €30,000 (exclusive of VAT). The minimum tax credit is €675 (based on qualifying expenditure of €5,000 (excluding VAT) x 13.5%) and the maximum is €4,050 (based on qualifying expenditure of €30,000 (excluding VAT) x 13.5%).
The credit will be payable over the two years following the year in which the work is carried out. The tax credit is non refundable so any unused tax credit will roll forward to the next year.
Work that will qualify for the tax relief will include house extensions, house renovations, plumbing, tiling, plastering and window fitting. Items such as furniture, white goods and carpets will not be covered.
Home owners must be LPT (Local Property Tax) compliant in order to qualify under the Scheme. The minister has stated that the move will support fully tax compliant builders as the spending and relief will have to be registered with the Revenue Commissioners. The Scheme will be administered through Revenue’s online systems.
The proposed introduction of the Home Renovation Tax Incentive Scheme has been warmly welcomed by construction groups as the scheme will address ongoing concerns about black economy operators and create jobs for qualified tradesmen.
The Society of Chartered Surveyors Ireland (SCSI) has said that the incentive will encourage people to use registered builders and discourage black market construction which is damaging standards in the sector.
Pat Barry of the Irish Green Building Council also said that the initiative will hinder “tax dodging cowboys” in the shadow economy but strongly insisted that more targeted measures to boost environmentally friendly construction will still be required:
“However the tax rebates above a certain level, must be targeted at measurable improvement in energy performance of the house, rather than just boosting construction for its own sake.”
Construction Industry Federation director general Tom Parlon said:
“The foundations for the recovery of our industry has been set in this Budget and this will help bring extra confidence, extra activity and most importantly, more construction jobs to our sector.
The Hardware Association Ireland (HAI) has welcomed the scheme. In a press release they stated that,
“HAI believes that the proposed tax incentive scheme will help to create employment at a local level all over the country through bringing much needed spend to local hardware retailers as well as builders, plumbers, electricians and sub-contractors. “
“This stimulus also has the major advantage of bringing construction activity out of the shadow economy, with huge benefits for the formal economy, given that the European Commission has estimated that between 16% and 17% of all construction and household repair work is undeclared. “
All in all, it looks like this will be a great boost to families wishing to expand and improve their homes. It will also generate employment at a local level all over the country for people in the construction sector.
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17th October 2013
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