Budget Tax Relief for first time buyers - self builds also?

neil_hosey

Hi

I was wondering if anyone knows whether this new tax relief for first time buyers or whatever it will turn out to be will apply to people building a house also?

I have been unable to find any info on this so far!

Thanks
Neil

We'll probably have to wait and see what is proposed.

tayto lover

I heard them say on RTE Radio that it was only for people buying new homes.
This sounds silly as first time buyers usually buy cheap homes for sale.

JohnRock

It will be unfortunate if its only for those buying a home. But we will have to wait and see what is announced

DOCARCH

Mod Note: Wait until Tuesday and see what happens! Not much point in speculating!

DOCARCH

Mod Note: Just reopening this...for a bit!

fits

BAH! self builds do increase supply right?

DOCARCH

fits wrote: »

BAH! self builds do increase supply right?

Yeah...but...

Being cynical, self builders are not represented by the CIF! :rolleyes:

fits

This will rule out most self builds anyway

The house must be a new
build and applicants must take out a mortgage of at least
80% of the purchase price. This scheme will run until the
end of 2019.

mjp

Surely they have to open it to people building new homes aswell. Will be livid if don't get any benefit from this.

fits

It does include self builds!

The property (house or apartment) must be a new build or a self-build. It must be purchased or
built as the applicant’s principal private residence. The relief is not available for buy-to-let
properties.
In order to qualify, applicants must take out a mortgage of at least 80% of the purchase price, or in
the case of a self-build, 80% of the valuation approved by the mortgage provider. Individuals who
are in a position to avail of a mortgage at a lower loan to value ratio than 80% already have sufficient
resources to more than meet the deposit requirements of the macro-prudential rules and thus are
less in need of assistance from the Exchequer.
This incentive will be open to applicants who have signed contracts to purchase their home on or
after 19 July 2016. In the case of a self-build, applicants who drew down the first tranche of their
mortgage on or after 19 July 2016 will also be eligible. This was the date of the launch of ‘Rebuilding
Ireland: Action Plan for Housing and Homelessness’. The backdating of this incentive was
announced at that time with a view to avoiding any potential interruption in house sales, by
purchasers who may otherwise have deferred purchases, pending the commencement of the
incentive. The incentive is scheduled to run until the end of 2019.

Dardania

fits wrote: »

It does include self builds!

The property (house or apartment) must be a new build or a self-build. It must be purchased or
built as the applicant s principal private residence. The relief is not available for buy-to-let
properties.
In order to qualify, applicants must take out a mortgage of at least 80% of the purchase price, or in
the case of a self-build, 80% of the valuation approved by the mortgage provider. Individuals who
are in a position to avail of a mortgage at a lower loan to value ratio than 80% already have sufficient
resources to more than meet the deposit requirements of the macro-prudential rules and thus are
less in need of assistance from the Exchequer.
This incentive will be open to applicants who have signed contracts to purchase their home on or
after 19 July 2016. In the case of a self-build, applicants who drew down the first tranche of their
mortgage on or after 19 July 2016 will also be eligible. This was the date of the launch of Rebuilding
Ireland: Action Plan for Housing and Homelessness . The backdating of this incentive was
announced at that time with a view to avoiding any potential interruption in house sales, by
purchasers who may otherwise have deferred purchases, pending the commencement of the
incentive. The incentive is scheduled to run until the end of 2019.

Backdating is interesting - they obviously learned their lesson from when they introduced the HRI a few years ago

DOCARCH

fits wrote: »

It does include self builds!

Fair nuff! I was just going by the budget speech Michael Noonan gave.

Would have been pretty unfair if it did not include (new) self-build houses, as they do add to the housing stock.

Curious Geroge

Watch as new house prices gradually start to increase by 15% before the end of the year..

A mortgage of 80% of the valuation will rule me out - I am being punished for saving hard for years.

Dardania

Deleted User wrote: »

A mortgage of 80% of the valuation will rule me out - I am being punished for saving hard for years.

You don't have use all of your savings on the deposit.
Also, I guess you could overpay later...

fits

If you dont qualify for a higher mortgage based on affordability criteria, you might just have to use your savings anyway and give up the help to buy scheme.

morrga

Is it per person or per couple?

B-D-P--

Ok,
So... If I end up building for 79,999, and the house is worth 100,000, I dont qualify?
I want to come into the 80% bracket because Ulsterbank have a good 2.99% rate for those who do.


note figures are examples, I'm hoping for a 250,00 build.

Dardania

Dardania wrote: »

You don't have use all of your savings on the deposit.
Also, I guess you could overpay later...

I can't complain too much I suppose - I am getting a free site and have good savings.

LTI rules would limit me borrowing over 80% of the value of the house, unless I got an exemption.

Eric Cartman

so whats the sliding scale on this, does the valuation of my build have to be 400k to take the government for the 20k or could I buy a cheap site, build a 2 bed house (for now) totalling the 150k ish mark and take them for the lot ?

pilly

Eric Cartman wrote: »

so whats the sliding scale on this, does the valuation of my build have to be 400k to take the government for the 20k or could I buy a cheap site, build a 2 bed house (for now) totalling the 150k ish mark and take them for the lot ?

No, it's 5%.

pilly

morrga wrote: »

Is it per person or per couple?

Only one relief per house.

pilly

Deleted User wrote: »

A mortgage of 80% of the valuation will rule me out - I am being punished for saving hard for years.

I wouldn't call it being punished. It just means that you don't need the money as much as others do.

That's like saying anyone who bought a house up to now is being punished.

mjp

Valuation of house means nothing to those building it and be more relevant to base it off overall cost. Surely I could build a house on my site for cost of €250K but could be valued at €350k due to location views etc. I'm therefore being punished for something which outside my control.

TheAlbert

Am I missing something, this actually puts people that were struggling to get a deposit together in a worse off short term position.

Under the previous CB rules a house worth €220,000 needed a FTB Deposit of €22,000 (10%)

Now you need €44,000 with a tax rebate of €11,000 (net €33,000) ?

fits

That's a very good point! It should be 80% of build cost, not of value.

fits

TheAlbert wrote: »

Am I missing something) ?

Yes you are. You have to borrow at least 80%. 90% still qualifies.

Carlos Orange

Deleted User wrote: »

A mortgage of 80% of the valuation will rule me out - I am being punished for saving hard for years.

In practice if this rule had existed when I was buying my house this year it would just have encouraged me to borrow more since it is basically a subsidy on borrowing.

Walter2016

TheAlbert wrote: »

Am I missing something, this actually puts people that were struggling to get a deposit together in a worse off short term position.

Under the previous CB rules a house worth €220,000 needed a FTB Deposit of €22,000 (10%)

Now you need €44,000 with a tax rebate of €11,000 (net €33,000) ?

No, it says MIMIMUM 80% mortgage.

So if house is 220k, you can get 5% of price as tax refund leaving a minimum deposit of 11k required.

House costing 320k, 16k max tax refund and deposit of 26k required - 10% of 220, 20% of 100k less 16k tax refund.

Walter2016

[Deleted User] wrote: »

A mortgage of 80% of the valuation will rule me out - I am being punished for saving hard for years.

Borrow 80%, put the rest into a deposit account, then pay off part of mortgage after drawdown

TheAlbert

Ok Great Walter2016, they missed out the MINIMUM word on the article in the Irish Times I read - thanks for the clarification

SeanoChuinn

Been watching this closely today. Know it'll take a few days before all the facts are clear. Here's our situation. Just returned after 6 years working away, now home 1 year. We're mid application with a bank for a 250k mortgage for a self build house. Don't know yet what bank will tell us final valuation will be, but obviously greater than 250k. Would we benefit at all from what was announced today? So many caveats its hard to know. Thanks all.

pilly

TheAlbert wrote: »

Am I missing something, this actually puts people that were struggling to get a deposit together in a worse off short term position.

Under the previous CB rules a house worth €220,000 needed a FTB Deposit of €22,000 (10%)

Now you need €44,000 with a tax rebate of €11,000 (net €33,000) ?

No, you're working that out completely wrong. Nothing to do with your deposit. It's a minimum of 80% mortgaged, not maximum.

Walter2016

SeanoChuinn wrote: »

Been watching this closely today. Know it'll take a few days before all the facts are clear. Here's our situation. Just returned after 6 years working away, now home 1 year. We're mid application with a bank for a 250k mortgage for a self build house. Don't know yet what bank will tell us final valuation will be, but obviously greater than 250k. Would we benefit at all from what was announced today? So many caveats its hard to know. Thanks all.

Its a tax rebate, so you would have to had paid tax in the past 4 years to get it.

If by the time you draw down the first monies you have paid income tax, you can get that rebated up to max of 5% of value assuming mortgage is for 80% or more of value.

SeanoChuinn

Back home and working over 12 months now Walter2016, so yes have paid income tax in last 4 years.

thatslife

For self builds, the LTV needs to be 80% and you need to have made 1st drawdown after July 19 to be eligible - i get.
The query I have is, this 80% LTV, is this decided by the mortgage given to you by the Lender originally or by the final drawdown valuation? LTV could be different at end of build.

Walter2016

SeanoChuinn wrote: »

Back home and working over 12 months now Walter2016, so yes have paid income tax in last 4 years.

Then you should be in luck. Once all the details are published check through them and ensure the valuation part works in your favour.

Ps - your other half will have it spent on a better kitchen

Alfa_D

Initial contracts signed back in April but no mortgage drawn down yet. Am I eligible?? Mortgage LTV of 90℅ for house value of 260k

pilly

Alfa_D wrote: »

Initial contracts signed back in April but no mortgage drawn down yet. Am I eligible?? Mortgage LTV of 90℅ for house value of 260k

They are backdating it to July so not sure. I suppose you'll have to wait for the fine print.

pilly

SeanoChuinn wrote: »

Back home and working over 12 months now Walter2016, so yes have paid income tax in last 4 years.

Only problem there is Sean, the way I read it you won't get back more than you've paid in tax.

SeanoChuinn

Yeah we'll have missed 3 years of the last 4 paying tax having been working away from home, but I guess even if its only a small amount it'd be better than nothing. Worth asking at least!

pilly

SeanoChuinn wrote: »

Yeah we'll have missed 3 years of the last 4 paying tax having been working away from home, but I guess even if its only a small amount it'd be better than nothing. Worth asking at least!

Absolutely, any tax you can get back from the government go for it.

Murt15

Just finished a newly built house. Final mortgage drawdown was last month. LTV - 79.17%. What's the chances of being eligible for this relief ? Would it be worth lobbying local TD for this ?

Murt15

SeanoChuinn wrote: »

Yeah we'll have missed 3 years of the last 4 paying tax having been working away from home, but I guess even if its only a small amount it'd be better than nothing. Worth asking at least!

Would it be worth your wile holding back another year or so before you commence building so that you would have more tax paid.

Dardania

Murt15 wrote: »

Just finished a newly built house. Final mortgage drawdown was last month. LTV - 79.17%. What's the chances of being eligible for this relief ? Would it be worth lobbying local TD for this ?

Can you get a top up on the mortgage?

Walter2016

Murt15 wrote: »

Just finished a newly built house. Final mortgage drawdown was last month. LTV - 79.17%. What's the chances of being eligible for this relief ? Would it be worth lobbying local TD for this ?

If first drawdown was after july 19th, you get it. Otherwise not a chance.

Ray Donovan

I have to say Im confused on this. Im currently in the process of a self-build

1) First draw down was after July 19th
2) Build cost €250,000
3) Mortgage €250,000
3) Value of build upon completion as done by valuer appointed by my bank is €360,000
Does this mean Im not entitled to this scheme? Or can I get a re valuation of house after completion? And apply then?
Lots of questions need to be answered with this. Not least what if the site was a gift? How does this effect scheme?

Murt15

Dardania wrote: »

Can you get a top up on the mortgage?

Looks like its a non runner as first drawdown should be after July 19th. Its a pity, 12,000 euro sure would come in handy.

fits

I have to say Im confused on this. Im currently in the process of a self-build

1) First draw down was after July 19th
2) Build cost €250,000
3) Mortgage €250,000

As it stands you wouldnt be eligible as its based on loan to value, not loan to build cost. But I strongly believe they will have to change this.

SeanoChuinn

So we're all assuming here and guessing at this point based on the few bits of clear information we have so far, but once the dust settles where do people actually go to find out if or what they qualify for, is it a single payment prior to mortgage down payments, will it cover deposit "costs" etc. etc.? So many questions. Is the bank qualified or the Tax Office to answer all our questions?