What is the Home Renovation Incentive (HRI) Scheme?
The Home Renovation Incentive (HRI) is a relief from Income Tax (IT) for homeowners, landlords and local authority tenants. Following the successful implementation of the scheme over the past few years an extension until December 2018 was announced during Budget 2017. You can claim the HRI Tax Credit for repairs, renovations and improvements to your home or rental property. The credit is 13.5% of your qualifying spend up to a maximum of €30,000 per property – so it is well worth looking at. The tax credit will be given over the two years following the year in which the work is carried out. The work must be carried out before 31st Dec 2018. Homeowners must be Local Property Tax (LPT) compliant in order to qualify under the Scheme and building contractors must also be tax compliant in order to carry out works. The Scheme is administered through Revenue’s online systems.
What Type of work Qualifies?
To qualify for the tax relief, you must have paid Value-Added Tax (VAT) at 13.5% on the work done to your property. Qualifying work includes:
- painting, decorating and tiling
- plastering, plumbing and rewiring
- bathroom upgrades
- fitted kitchens
- window replacement
- extensions and attic conversions
- garages, driveways and landscaping
- septic tank repair or replacement.
Goods and services that are provided by your contractor with a VAT rate of 23% do not qualify. These include:
- services such as architects’ fees.
- If you buy materials yourself, for example, paint or tiles, you cannot include them in your claim for tax relief.
What type of property qualifies under HRI?
The property must be either:
- your main home in which you live
- a property that you rent out. This must be occupied by a tenant and registered with the Private Residential Tenancies Board within six months of the work being completed.
- Properties such as holiday homes or new builds do not qualify for the HRI scheme.
When does the work have to be carried out?
- If you are a homeowner, you may claim for qualifying work that was carried out and paid for from 25 October 2013. If you are a landlord, you may claim for work carried out and paid for from 15 October 2014. If you are a local authority tenant you may claim for work carried out and paid for from 1 January 2017.
- You cannot claim for any work carried out or paid for after 31 December 2018.
- The only exception to this closing date is if planning permission is required for the work. If this is in place by 31 December 2018, you can claim for work carried out and paid for up to 31 March 2019.
How much can I claim?
- To qualify for the Home Renovation Incentive (HRI) Tax Credit, you must spend at least €4,405 (excluding VAT) on each qualifying property.
- The tax credit is calculated at 13.5% of the qualifying spend (excl. VAT)
- You can claim the HRI Tax Credit up to a maximum of €30,000 (Excl. VAT) of your total cost. Any amount over €30,000 will not be taken into account.
- The total cost can be from one job or from a number of jobs on the property. It can also be done by one or more qualifying contractors.
- Any work that you claim for must be done and paid for before 31st December 2018.
- If you have received a grant for some of the work, the cost of that work can still be included but the qualifying expenditure will be reduced by three times the amount of the grant payment.
- If you have a single rental property that is converted into multiple rental units, each unit is treated separately for HRI. The maximum of €30,000, (excl. VAT) applies to each of the individual rental units.
Choosing a HRI contractor
To qualify for the Home Renovation Incentive (HRI) Tax Credit, the contractor carrying out the work must be registered for VAT and be tax compliant. You can check that your contractor qualifies by making sure they enter the details of the work through HRI online. If the contractor does not qualify for HRI, they will not be able to enter the details through HRI online.
Before any work begins, you should:
- tell the contractor that you will be applying for the HRI Tax Credit
- ask the contractor to confirm that they are a qualifying contractor under the scheme
- give the contractor details of your Property ID (your Property ID is included on your Local Property Tax (LPT) letters from Revenue)
- tell the contractor if it is a rental property.
- ask the contractor to enter the details of the work through HRI online
It is up to you to confirm that the contractor has input details of the work on HRI online before the work begins. The contractor must also enter details of payments as you make them on HRI online You will be unable to claim the HRI Tax Credit if the contractor does not do this.
How is the Tax Credit paid?
- You claim the HRI Tax Credit the year after the work has been carried out and paid for.
- The HRI Tax Credit is claimed online – you should use:
myAccount if you pay tax through PAYE
Revenue Online Service (ROS) if you pay tax through self-assessment.
Alternatively, your accountant can make the claim on your behalf.
- Your HRI Tax Credit is added to your other tax credits and split evenly over the two years following the year the work was carried out. This is the same for both PAYE and self-assessment
Do I qualify?
Before you start thinking about what you are going to do with your tax credit, be aware of the restrictions in place for this scheme.
To qualify for the Home Renovation scheme:
- you must pay income tax under Pay As You Earn (PAYE) or self-assessment
- your Local Property Tax (LPT) payments must be up to date (this does not apply if you are a local authority tenant)
- the work to your property must be carried out by HRI qualifying contractors
I think I qualify – how do I apply?
Before you apply, you must be registered for either:
- myAccount, if you are an employee and pay tax through PAYE
- Revenue’s Online Service (ROS), if you are self-employed.
- Further information on applying for the scheme is available here http://bit.ly/2oV6Zga
MLMG are Independent Financial Advisors based in Buncrana, Co. Donegal. We pride ourselves in providing honest expert financial advice in a way that is easy to understand. Every client, big and small, is treated the same; you will be advised on the basis that we are standing in your shoes; We will take the time to ensure you understand your finances and your financial needs. We then help you put a plan in place to protect you, your family, your business into the future. We are independent – not tied to any specific bank, financial institution or product provider.
Is your existing agent giving you information on potential schemes you can avail of? If not, are you missing out on other very relevant information? At MLMG our purpose is to keep our clients up to date and informed. Contact us here or call MLMG on 07493 21420 for a consultation.
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