Home Renovation Incentive Scheme
The Home Renovation Incentive (HRI) scheme enables homeowners (or landlords – not dealt with here) to claim tax relief on repairs, renovations or improvement work that is carried out on their main home or rental property by tax-compliant contractors and that is subject to 13.5% VAT.
The HRI is paid in the form of a tax credit at 13.5% of qualifying expenditure, which can be set against your income tax over 2 years. This effectively reduces the rate of VAT to zero on qualifying work which qualifies for VAT of 13.5%, up to a maximum value of €30,000.
In order to qualify for the HRI, the work must be done between 25 October 2013 and 31 December 2018 (the scheme was extended in this year’s budget from December 2016 to December 2018).
Rules of the scheme
- To qualify for the HRI as an owner-occupier, the work must be carried out on your principal private residence.
- You must be up to date with your obligations under the Local Property Tax and, if applicable, the Household Charge. You must be paying income tax – whether under PAYE or self-assessment – to avail of the HRI.
- Any contractor you use must be a HRI compliant contractor, and will therefore be registered for Value Added Tax (VAT)in Ireland and be tax-compliant. If several contractors, such as a builder, a plumber and an electrician, carry out qualifying work on your home or rental property, you can combine the cost of the works to make up the minimum qualifying amount.
- The homeowners main home, in which the homeowner must own and live in; or
- A second hand home, which the Homeowner has bought and will live in as his / her main home, after the works are completed.
Note that holiday homes, new builds and refurbishment or reconstruction of an uninhabitable house do not qualify for the HRI.
- The type of work that qualifies for the HRI is repair, renovation or improvement work that is subject to VAT at 13.5%. This includes extensions, garages and attic conversions; the supply and fitting of kitchens, bathrooms and built-in wardrobes; fitting of windows; garden landscaping; plumbing, tiling, rewiring, plastering and painting
- If you are having your septic tank repaired or replaced, or are installing a radon gas mitigation solution, these types of work also qualify for the HRI. Work on driveways and on rainwater harvesting systems can also qualify.
- Be aware that work that is subject to VAT at 23%, such as architect or legal fees, is not covered. Neither are items such as furniture, white goods or carpets, or the purchase of materials such as paints, tiles etc…
- In general, the work must be carried out and paid for between 25 October 2013 and 31 December 2018.
Amounts of tax rebate available
The qualifying work must cost at least €4,405 before VAT at 13.5%, which comes to a total of €5,000 with VAT included. You will only get the tax credit in relation to a maximum of €30,000 (before VAT) during the period covered by the HRI.
This €4,405 (before VAT) can be the total from any number of jobs on the property carried out and paid for to 31 December 2018. While there is no upper limit on expenditure on qualifying works, the tax credit will only be given in relation to a maximum of €30,000 (before VAT at 13.5%) per qualifying property.
Based on these amounts, the minimum credit is therefore €595, based on the minimum qualifying expenditure of €4,405. The maximum is €4,050, based on the maximum qualifying expenditure of €30,000.
Note – if you are having qualifying work done but aren’t spending over €4,405 (before VAT) on the property, it’s still worth choosing a HRI qualifying Contractor and having the work details entered on HRI online. You may have more qualifying work carried out on the property between now and 31 December 2018. All the spending on the property, added up, could reach the €4,405 (before VAT). It will be very difficult to go back to a Contractor, to try to get him or her to enter details to HRI online, for a job from a year or more ago, so keep it up to date.
Please be aware that your contractor(s) must enter details of the work on the HRI online administration system. This system is only accessible to contractors who are registered for VAT and are tax-compliant.
Claiming the credit
You can claim the HRI tax credit after the end of the tax year if your qualifying expenditure has reached the minimum amount of €4,405 before VAT (a total of €5,000) and you have paid income tax. Any unused tax credit can be rolled over into the following year.
In general, the tax credit is payable over the 2 years following the year in which the work is carried out and paid for. If you are on PAYE, your HRI tax credit will be divided evenly across your pay dates for each of the 2 years that it is payable. If you are a self-assessed taxpayer, it will be included in your self-assessment over 2 years, half the tax credit each year.
The tax credit is only available if you pay Income Tax under PAYE or Self Assessment.
The Incentive is administered through Revenue’s HRI online system,which is available on myAccount (for homeowners) and ROS for contractors. All works, payments and claims must be entered on HRI online. Both myAccount and ROS can be accessed on the Revenue.ie website.
- Ensure that you have paid or arranged to pay any Local Property Tax (LPT) or Household Charge that is due
- Check that your contractor has a VAT number and is tax-compliant
- Ensure that the work qualifies – see ‘Qualifying work’ above
- Keep all supporting documentation – tax clearance certificates, estimates, receipts etc.
If you need any further information on this, please don’t hesitate to get in touch.