The current relief on DIRT (Deposit Interest Retention Tax) is deducted at source by banks from interest paid on savings. The new measures allow first-time buyers to receive a refund of up to 20% on the purchase price of their house.
This allowance comes at the same time when the Central Bank has recommended that banks should restrict mortgage approval to up to 80% of the value of a property after January 2014.
The refund was available from midnight on Budget day and will run until 2017.
It is anticipated that the measure will cost the Government €2.8 million.
Property purchase incentive
The new economic outlook for those looking to profit on market gains on their property isn’t as good when it comes to tax relief.
From the end of December this year the relief on Capital Gains Tax, which is paid on the ‘capital gain’ made when a property is sold, is going to disappear. This tax relief had been in place since 2011.
This measure worked as an incentive for people to purchase property as gains made were not taxed for the first seven years of ownership.
Buyers wanting to benefit from Capital Gains Tax exemption still can, but have to buy their property before the end of December this year.
Home Renovation Incentive
Under changes to the Home Renovation Incentive (HRI) landlords will now be able to avail of the scheme that previously only applied to home owners. This is conditional on them being liable to pay income tax.
If you live in a rental property, this could mean it is in with a better chance of being spruced up.
The extension of this scheme will cost the Government €3 million and it is hoped that it will generate more activity in the building sector.
The HRI scheme was introduced last year in Budget 2014 and gives homeowners a tax break of 13.5% on renovations costing between €5,000 and €30,000.
The threshold for the level of income that is exempt under the ‘Rent-A-Room’ scheme has been increased to €12,000 per annum from €10,000 last year.
Under this scheme, which is available only to individuals and not businesses, those renting out rooms are not required to pay income tax up to that amount of the yearly allowance.
The idea behind this is that it should increase the number of rental accommodation units available across the country. The level of income exempt under the scheme has increased steadily since being introduced in 1997.