3 Steps to Calculating your First Time Buyer Tax Refund

3 steps to calculating your First Time Buyer Tax Refund

Tax refunds worth €20,000 to fund deposits for First Time Buyers

If you need overview information on how the scheme works, check out our article Help-to-Buy explainer.

Want to calculate how much money you could receive using the Help to Buy Incentive scheme? Here’s our simple step by step guide to help you work out your tax refund amount.

 

Step 1: Work out the maximum allowable tax refund amount

You will need:

  • The expected date of your property purchase
  • The expected cost of your property

 

Using this information, look at our table below to find the maximum allowable tax refund amount:

Property Purchase Price Maximum Tax Refund
Up to €400,000 (from 19 July 2016) 5% of property value
€400,000 – €600,000 (19 July – 31 Dec 2016) €20,000
Over €600,000 (19 July – 31 Dec 2016) Zero
€400,000 – €500,000 (from 1 Jan 2017) €20,000
Over €500,00 (from 1 Jan 2017) Zero

 

Step 2 : Check how much income tax and DIRT you have paid over the last 4 years.

You will need:
Your P60s (or P21 balancing statements) for each year
Your savings bank account statements and/or interest certificates (this is only relevant if you have deposit savings accounts)

If you are buying in 2017, the 4 relevant tax years are 2016, 2015, 2014 and 2013.

Using these documents, add up how much income tax and DIRT (deposit interest retention tax) you have paid over the last 4 years. Only the PAYE tax amount is relevant for calculating your income tax figures. Amounts that you have paid for PRSI and USC do not count towards this refund.

 

Step 3: Your Tax Refund Amount

The figure you have worked out in Step 2 is the tax refund amount you will receive – unless it is more than the figure you have worked out in Step 1.

If the figure in Step 2 is higher than the figure in Step 1, your tax refund amount will be the Step 1 figure.
Here are some examples:

John is buying a house in 2017 costing €325,000.

Step 1 calculation: John’s maximum claim is 5% of €325,000 which is €16,250.

Step 2 calculation: John has had no savings accounts and was unemployed in 2013 and 2014 but working in 2015 and 2016. Looking at his P60s for 2015 and 2016, John saw that he had paid total income taxes of €6,500.

Tax refund figure: John is entitled to a tax refund of €6,500.

Anna and Peter are buying a house in 2017 costing €450,000.

Step 1 calculation: Their maximum claim is €20,000.

Step 2 calculation: Both have been working for the last 4 years and also had a small amount of savings in deposit accounts. Looking at their P60s and savings interest statements for the 4 years 2016, 2015, 2014 and 2013, they see they have paid total taxes of €26,000.

Tax refund figure: Although they have paid taxes of €26,000, the maximum allowable amount is €20,000. Therefore, their tax refund figure is €20,000.

 

How do I apply?

If you are a PAYE worker you need to register on myAccount and complete an online Form 12 for the previous 4 years. Self-employed individuals must be registered with Revenue’s Online Service (ROS) and submit Form 11s up to date (if they haven’t already done so) and pay any outstanding taxes.

If you need help completing either a Form 12 or Form 11, get in touch. As personal tax experts who have processed over 5,500 income tax returns, we’ll have you sorted in a flash.

About Sinead Doherty

A passionate advocate of personal wellbeing and positive mental health, she is particularly interested in the field of Positive Psychology and is the force of enthusiasm behind Fenero’s wellbeing initiatives.

Related Posts