The Irish Ministry of Finance has published the Finance (No. 2) Bill 2013 giving force to measures announced in the 2014 Budget, and bringing forward the value-added tax incentive being introduced for home renovations.
Relief is being granted at a rate of 13.5 percent on qualifying expenditure up to a maximum of EUR30,000 (excluding value-added tax.) The minimum expenditure must be EUR5,000 (excluding VAT), which would attract a credit of EUR675. Where the work exceeds EUR30,000, a maximum credit of EUR4,050 will apply.
Relief will be granted by way of tax credit split over two years following the year the renovation or improvement work is carried out. If work is grant aided or, if any form of compensation or other tax relief is received in respect of the work, the amount of expenditure qualifying for relief will be reduced accordingly.
In response to concerns that implementing the relief from January 1, 2014, would encourage project delays, the Government has instead announced that the scheme will run from October 25, 2013, to December 31, 2015. Works carried out in 2013 will be deemed to have taken place in 2014 and the credit will be awarded in 2015 and 2016, the Government has confirmed.
To qualify for the scheme, both the homeowner and the contractor must be tax compliant. Contractors will be required to inform the Irish tax authority, the Revenue Commissioners, in advance of details of works to be carried out, and will also be required to notify Revenue in relation to any payments received in respect of the works. Homeowners will be able to view the information provided to Revenue by the contractor through the Revenue electronic systems, through which relief will be claimed.
The Home Renovation Incentive has been established through the insertion of a new section 477B in the Taxes Consolidation Act 1997.