A range of tax breaks and grants can
help you buy a historic pile, a place in the country or fix up a vacant
property to rent out
Tax breaks and grants can be
worth tens of thousands of euro to house buyers - particularly those buying
property which needs work. So such State digouts should be at the forefront of
your thoughts if buying either a home or an investment property - because they
could considerably ease the financial burden of such a big purchase.
Tax breaks and Government grants
shouldn't be your only reason to buy property but should you inadvertently fail
to qualify for them, you could lose out on a lot of money.
Here are some of the main
property tax breaks and grants worth knowing about.
Rural grants
Should you be considering moving
into or back to the country, the Government is set to offer grants soon to
those buying homes in designated rural towns - as long as the money is used to
renovate or refurbish the property. The grants are part of the Government's
plan to encourage more people to live in rural towns and villages.
The Government will take its
first step towards the roll out of these grants in the coming months. A pilot
scheme, which will be launched in the second half of this year, will examine
ways in which properties that are not in use in town centres can be renovated
to allow them to lived in.
"It is envisaged that under
the proposed scheme, a grant will be available to owner-occupiers to renovate
or refurbish premises in town and village centres, to make them suitable for
residential use," said the Minister for Arts, Heritage, Regional, Rural
and Gaeltacht Affairs, Heather Humphreys.
Vacant home loans
New government loans are expected
to be offered to owners of vacant properties to encourage them to refurbish
those homes and either put them on the private market for sale - or rent them
out to private tenants. These loans are set to be recommended to the Housing
Minister, Simon Coveney, in a report due to be published shortly.
There is already a scheme where
you can get a vacant property repaired - as long as you make it available for
social housing for at least 10, 15 or 20 years (depending on the cost of the
repairs). The Repair and Leasing Scheme is aimed at owners of vacant properties
who cannot afford the repairs needed to bring their property up to the standard
for renting.
This scheme can be particularly
useful if you already own your home and have just inherited a property which is
run-down - but you cannot afford to renovate it. The cost of any repairs will
be initially met by your local authority or an approved housing body - but that
cost will over time be taken out of the rent you earn from leasing your
property to social housing tenants.
To qualify for the scheme, your
property must be suitable for social housing and it must also have been vacant
for at least a year.
The scheme, which was initially
piloted in Carlow County Council and Waterford City and County Council, has
been rolled out nationwide. Before signing up however, bear in mind that you're
likely to earn higher rent on the private rented market - and that you could
raise money for repairs from your credit union or bank.
Landlord tax breaks
In a bid to encourage 'accidental
landlords' to continue to rent out their homes, tax breaks for such landlords
are being considered by Government.
In a public consultation earlier
this year, the Department of Finance set out some possible tax measures which
might be introduced for landlords. Some of the measures mooted include a tax
exemption or relief for income from long-term leases, and tax relief for the
capital repayments of a mortgage. Currently a landlord can get tax relief on
the interest that arises from the mortgage of the rented property - however,
relief cannot be claimed on the capital repayments (the portion of the mortgage
repayment which is paid off the balance of the original loan).
Landlords and homeowners can
already get tax breaks for repairs, renovations or improvements under the Home
Renovation Incentive (HRI) scheme. Some of the work which qualifies for HRI
relief includes extensions and attic conversions, the fitting of windows,
garden landscaping, plumbing, rewiring, and the repair or replacement of septic
tanks.
Historic homes
Should you wish to buy a historic
home and get tax breaks for renovations - without the inconvenience of opening
your home to the public, consider buying a property under the Living City
Initiative, where owners of residential houses at least 100 years old can claim
tax relief and refurbishing costs - over 10 years.
The Living City Initiative tax
breaks can only be claimed on buildings in the historic centres of six cities -
Dublin, Cork, Limerick, Galway, Waterford and Kilkenny.
As the scheme was extended to
landlords this year, they can also claim tax relief on the cost of refurbishing
a rented property.
In this case, the relief - which
is given to landlords and owners of certain commercial properties in the form
of a capital allowance - is claimed over seven years.
There is another scheme that
offers tax breaks to the owners of historic homes - however, you must allow
public access to your property to be eligible for it.
Under Section 482 of the Taxes
Consolidation Act 1997, tax relief from income tax or corporation tax is
available to the owners of certain historic homes or gardens for expenditure
incurred when repairing, maintaining or restoring their properties.
"Reasonable" access (of
typically 60 days a year) to the building or garden must be given to the public
- unless it is in use as a registered guest house for at least six months a
year.
The Government is reviewing this
scheme so it may be discontinued - or replaced with loans or grants. The review
is examining whether Section 482 tax relief is the best way to help the
Government achieve its aim of preserving historic homes - or if funding should
be granted instead. A public consultation was launched last February and the
submissions are being assessed. In 2009, the Commission on Taxation recommended
this scheme be discontinued.
No matter how tempted you are by
tax breaks, don't take on a historic home lightly - as the renovation bill
could run into tens of millions.
Many historic homes are listed
buildings. "When you take on a listed building, you are obliged to ensure
your building doesn't become endangered through damage or neglect," said
Michael Brennan, business development area manager with Ecclesiastical
Insurance, which specialises in insurance for historic homes.
"If such a building becomes
damaged, the local authority will want it restored to its former glory. Costs
can start to spiral quite quickly when you're restoring an old home."
Hire a specialist architect or
surveyor before buying, Brennan advises. "If you hire a standard surveyor
or assessor, you could run into trouble," he said.
"You need to be especially
aware of the condition of the building. It could have stone and brick walls and
a lot of internal architecture. You could discover there's mould in the walls
or damage to the roof. A lot of older buildings have old pipes which may need
to be replaced with something new and modern. Once you've bought the building,
you are legally obliged to maintain it."
As always with property, buyer
beware.
Source: Sunday Independent
