New home buyers to claim VAT back on their income tax from 2017

Voluntary

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I didn't give this much thinking but I must admit this is an interesting idea.

Tax break for new house buyers mooted by Michael Noonan

This scheme allows homeowners to claim the VAT rate on their renovations over the subsequent two tax years, so 13.5 per cent of what is spent on the property is returned as a tax credit.

A similar scheme for buyers was “under active consideration by my department”, he told the committee.
Taking a 300k new home as an example, 13,5% VAT equals over €40,000. If no upper limit is applied to the amounts to be claimed back, tax paying house buyers would get quite large financial relief.
In this particular example a family on 60-80k income would probably live tax free for 2 years after buying a new house.

Noonan may be right on giving tax breaks to buyers instead of giving them to developers.
This would also mean the VAT back would go to Irish taxpayers and not offshore investment funds who don't pay income tax here.

What do you think?
 
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mr_anderson

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Will banks 'allow' this tax-back in their 3.5 x income calculation ?

If they do, then all it will accomplish is higher house prices.

But then, that's precisely what Noonan has indicated he wants.
 

amist4

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It's a developers dream.
 

Voluntary

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Will banks 'allow' this tax-back in their 3.5 x income calculation ?
No, as future taxes/incomes cannot be guaranteed, also the 3.5 limit is on gross, so no taxes/tax breaks are taken into consideration.

So this is another argument in favor of giving tax breaks to home buyers instead of developers. Reduced VAT on new builds at source would automatically be included in the Loan To Income calculations.
 
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HarshBuzz

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As long as the Central Bank holds firm in its lending rules, all will be well.

If this gets more houses built in Dublin, then work away.
 

Voluntary

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It's a developers dream.
Volumes sold would increase as more people would get interests in buying houses (tax back), however prices would probably not increase that much as are limited by the Central Bank income limits.
 

irishpatriot

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I didn't give this much thinking but I must admit this is an interesting idea.

Tax break for new house buyers mooted by Michael Noonan



Taking a 300k new home as an example, 13,5% VAT equals over €40,000. If no upper limit is applied to the amounts to be claimed back, tax paying house buyers would get quite large financial relief.
In this particular example a family on 60-80k income would probably live tax free for 2 years after buying a new house.

Noonan may be right on giving tax breaks to buyers instead of giving them to developers.
This would also mean the VAT back would go to Irish taxpayers and not offshore investment funds who don't pay income tax here.

What do you think?
That should be enough to get the property pyramid scheme up and running again so we have another property bubble to burst later on
 

Voluntary

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That should be enough to get the property pyramid scheme up and running again so we have another property bubble to burst later on
With the Central Bank income to loan enforced limits I don't really see a potential for large house prices increases.
With such limits in place, long term house prices may only increase in line with incomes.
 

Watcher2

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No, as future taxes/incomes cannot be guaranteed, also the 3.5 limit is on gross, so no taxes/tax breaks are taken into consideration.

So this is another argument in favor of giving tax breaks to home buyers instead of developers. Reduced VAT on new builds at source would automatically be included in the Loan To Income calculations.
I thought the problem was a supply one, not a demand side issue so giving this break to the buyer will only result in increased demand and therefore higher price pressures for the already limited stock.

This is a stupid idea.
 

HarshBuzz

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With the Central Bank income to loan enforced limits I don't really see a potential for large house prices increases.
With such limits in place, long term house prices may only increase in line with incomes.
Mr A will know more than us but I get the impression the 'cash buyer' (50% of the market recently) has peaked - quite a lot of houses starting to reduce prices in my leafy Dublin suburb. The CB regulations are working.
 

PBP voter

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Has anybody ever explained the boom-bust cycle to our governments?

 

HarshBuzz

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GDPR

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Can the CIF explain why the cost of building has not dropped since 2008? Why have they not looked at their own costs and you know, reduce them? Why can I buy a new passive house standard semi-d standard size house for 170k in Enniscorthy, in a decent part of the town? Anything to do with land prices I wonder?
 

Voluntary

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The schema may mean the cost to a local working family (taxpayer) will only be 260k for a 300k house, while it still be the full 300k cost for foreign investors / tax avoiders.

Loan to income limit will be still on 300k for ones needing a mortgage, so no real upward pressure added on house prices.

I think that's actually a good plan.

Supply side measures are different story and hopefully will also be looked after. There's hell lot to do.
 

Voluntary

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Can the CIF explain why the cost of building has not dropped since 2008? Why have they not looked at their own costs and you know, reduce them? Why can I buy a new passive house standard semi-d standard size house for 170k in Enniscorthy, in a decent part of the town? Anything to do with land prices I wonder?
Plenty, plenty of land in Dublin and around, but with horrendous planning restrictions and without proper infrastructure.
Also, Ireland must be one of very few countries where a regular Joe can't simply browse hundreds of ads with building plots, buy one and build. No, we need to have estates with every single house looking boringly the same.
 

GDPR

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Why do planning levies amount to 55k in parts of Dublin and cost a little over 2k in another Council?
 

Gin Soaked

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Will banks 'allow' this tax-back in their 3.5 x income calculation ?

If they do, then all it will accomplish is higher house prices.

But then, that's precisely what Noonan has indicated he wants.
Would reducing the payment to the local authority to get a site serviced not be a better option?

And no policy which increases house prices should be supported by any government, of any persuasion.

Competitiveness and cohesion people....
 

GDPR

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Plenty, plenty of land in Dublin and around, but with horrendous planning restrictions and without proper infrastructure.
Also, Ireland must be one of very few countries where a regular Joe can't simply browse hundreds of ads with building plots, buy one and build. No, we need to have estates with every single house looking boringly the same.
I remember coming across an English architect seeking to design, good standard house types at affordable prices and launch it nationwide across the pond. Architects, urban designers, engineers, planners etc etc need to get their finger out here and offer affordable, decent standard solutions.
 


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