Budget Highlights for Property Owners and First Time Buyers

1. Home Renovation Incentive Scheme extended to include Rental Properties

The Home Renovation Incentive Scheme which operates by way of an income tax credit @ 13.5% on qualifying expenditure on repair, renovation or improvement works carried out to a qualifying property is to be extended to include expenditure on rental properties on or after 15th October 2014.  A tenant must occupy the rental property at the time the works are carried out or within six months of that time and the landlord must be subject to income tax on the rental receipts in order to claim the credit.  Any unused tax credit may be carried forward for use in future years.

2.  Capital Gains Tax Exemption Not Extended. The property must be acquired on or before 31st December 2014

The capital gains tax exemption for land or buildings acquired between 7 December 2011 and 31st December 2014 and owned for seven years will not be extended beyond 31st December 2014.  Whilst the purchase of the property should ideally have been completed by 31^st December 2014 in order to claim the relief, if an unconditional contract for the disposal of the property has been signed before the end of 2014, the exemption should be available even if the sale does not close until after that date.

3.  Abolition of Windfall Tax

It is proposed that the 80% windfall tax arising on the rezoning of land will be abolished with effect from 1^st January 2015.  This will no doubt push many property owners with sites for sale into the property market.

4. Rent a Room Relief Increased to €12,000 per annum

The threshold for exempt income under the Rent a Room Scheme is being increased to €12,000 per annum from the current amount of €10,000.

5.  Refund of DIRT @41% on interest on savings for First Time Purchasers

The Bill introduces new provisions for a refund of DIRT (currently at 41%) that has been deducted from interest on savings used by first-time purchasers to buy a house or apartment for use as their place of residence. A First-time purchaser is defined as an individual who has not either individually or jointly, previously purchased or built any other house or apartment.  The legislation provides for a refund of DIRT to be made to the purchaser on making a claim. Details of how to make a claim will be published shortly by Revenue.  The refund applies to DIRT deducted from interest paid on savings by the first time purchaser (up to a maximum of 20% of the consideration paid for the dwelling) at any time up to a 48 month period up to the date of the conveyance to the purchaser.  The relief will be available from 14th October 2014 until 31st December 2017 and does not apply to self-builds or sites.

6. Income tax Credit for Payment of Water Charges

It is proposed that an income tax credit @ 20% of the expenditure incurred on water charges (up to a maximum of €500) per annum will be available for water charges paid during any period of assessment.