Home Renovation Incentive Scheme (HRI)

Finance Bill (No. 2) 2013 provides for a Home Renovation Incentive (HRI) which will run from 25 October 2013 to 31 December 2015. The incentive provides for tax relief for Homeowners by way of a tax credit at 13.5% of qualifying expenditure on repair, renovation or improvement work carried out on a principal private residence. A house and gardens is considered to be a principal private residence provided the house has been occupied by the homeowner as his/her only or main residence during the homeowner’s period of ownership. A homeowner can only have one principal private residence at any one time.

Qualifying expenditure is expenditure subject to the 13.5% VAT rate. Qualifying work must cost a minimum of €5,000 (excluding VAT at 13.5%). While there is no upper limit on the cost of work, the tax credit will only be given in relation to a maximum of €30,000 (excluding VAT at 13.5%). The credit is payable over the two years following the year in which the work is carried out.

The work must be carried out and paid for on or after 25 October 2013 and up to 31 December 2015. Homeowners must be LPT compliant in order to qualify under the incentive while Building Contractors must be tax compliant in order to carry out works.

Qualifying work means repair, renovation or improvement work, which is subject to VAT at 13.5%, carried out on a Homeowners principal private residence. This type of work includes extensions, garages, attic conversions, supply and fitting of kitchens, bathrooms and built in wardrobes, window fitting, plumbing, tiling, rewiring and plastering. However, items such as furniture, white goods and carpets are not covered as well as work which is subject to VAT at 23%.

The limit of €30,000 (excluding VAT) applies per principal private residence for the duration of the incentive. Therefore, if qualifying work of €30,000 is carried out and paid for in 2014 and a further €30,000 in 2015 the credit will only be available with regards to the first €30,000.

The minimum tax credit is €675 (based on qualifying expenditure of €5,000 excluding VAT x 13.5%) and the maximum is €4,050 (based on qualifying expenditure of €30,000 excluding VAT x 13.5%). The tax credit is non refundable so any unused tax credit will roll forward to the next year. The tax credit is generally payable over the two years following the year in which the work is carried out.

It is planned that, the incentive will be administered through Revenue's online systems. All work, payments and claims will be registered electronically with Revenue.

If you are uncertain as to the application of this relief to your own personal circumstances, please do not hesitate to contact RDA Accountants’ Tax manager George Skelton CTA, ACA, MBA at our Wexford office for further assistance.