Revenue reminder on the Help-To-Buy Scheme requirements

The Revenue Commissioners have recently highlighted an issue connected to the Help To Buy (HTP) Scheme and Equity Finance.

In a circular sent to solicitors, they have asked the first time purchasers are reminded of the following:-

  1. HTB applicants should not include equity finance as a qualifying loan in their HTB claim.
  2. The equity finance should not be included in the Loan to Value (LTV) calculation.

One of the conditions of the HTB scheme is that the applicant must have a loan to value ratio of at least 70% and it is important to remember that any equity finance cannot form part of how this figure is arrived at.

The Revenue has highlighted a number of sections of tax legislation to explain the above.

Section 477C of the Taxes Consolidation Act 1997 provides the following definitions which are of relevance for the HTB scheme:-

  • “Loan-to-value ratio” – the amount of the qualifying loan as a proportion of the purchase value of the qualifying residence or the self-build qualifying residence.
  • “Loan” – any loan or advance, or any other arrangement whatever, by virtue of which interest is paid or payable.
  • “Qualifying loan” – a loan, which is used by the first-time purchaser wholly and exclusively for the purpose of defraying money employed in the purchase of a qualifying residence or the provision of a self-build qualifying residence (including, in a case where such acquisition is required for its construction, the acquisition of land on which the residence is constructed).  The loan must be one which is entered into solely between a first-time purchaser and a qualifying lender (but this does not exclude a loan to which a guarantor is a party).  To qualify, the loan must be secured by the mortgage of a freehold or leasehold estate or interest in, or a charge on, a qualifying residence or a self-build qualifying residence.

The Revenue have also confirmed that the loan-to-value ratio cannot be less than 70%.  This is also set out by legislation and it is a mandatory requirement of the Scheme.

If you would like more information on the HTB Scheme, or have general queries on the procedure for buying a house in Ireland, and the government schemes that are available to help you, then feel free to complete the form below and we will get in contact with you.

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