What is the Home Renovation Incentive?
The Home Renovation Incentive scheme enables homeowners or landlords 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. It was introduced for homeowners in October 2013 and was extended to landlords in October 2014.
The Home Renovation Incentive (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 (up to a value of €30,000).
In general, qualifying work must be done between 25 October 2013 and 31 December 2015 (for homeowners) and between 15 October 2014 and 31 December 2015 (for landlords).
Extension for a further year
In September 2015 it was announced that the HRI would be extended for a further year, up to 31 December 2016. Further information will be available at a later stage.
To qualify for the HRI as an owner-occupier, the work must be carried out on your principal private residence. As noted above, landlords can qualify in respect of work done on their rental properties.
Whether you are a homeowner or a landlord, 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 registered for Value Added Tax (VAT) in Ireland and be tax-compliant. Revenue has published FAQs for contractors. If several contractors, such as a builder, a plumber and an electrician, carry out qualifying work on your home, you can combine the cost of the works to make up the minimum qualifying amount – see ‘Rates’ below.
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.
Work that is subject to VAT at 23% (such as architect’s fees) is not covered. Neither are items such as furniture, white goods or carpets.
If you are unsure about whether your works will qualify, contact your Revenue office – see ‘Where to apply’ below.
Homeowners: In general, the work must be carried out and paid for between 25 October 2013 and 31 December 2015***. Qualifying work between 25 October 2013 and 31 December 2013 will be treated as if it was carried out and paid for in 2014.
Landlords: In general, the work must be carried out and paid for between 15 October 2014 and 31 December 2015***. Qualifying work between 15 October 2014 and 31 December 2014 will be treated as if it was carried out and paid for in 2015.
***However, if planning permission is required and is in place by 31 December 2015, work paid for up to 31 March 2016 will qualify.
As noted above, it was recently announced that the HRI would be extended for a further year, up to 31 December 2016.