The Home Renovation Incentive (HRI) scheme enables homeowners or landlords to claim tax relief on repairs, renovations or improvement work that is carried out on their main home or rental property by tax-compliant contractors and that is subject to 13.5% VAT.
In order to qualify for the HRI, the work must be done between 25 October 2013 and 31 December 2016 for homeowners and between 15 October 2014 and 31 December 2016 for landlords. (The original end date was December 2015.)
The HRI is paid in the form of a tax credit at 13.5% of qualifying expenditure, which can be set against your income tax over 2 years. This effectively reduces the rate of VAT to zero on qualifying work, up to a value of €30,000.
To qualify for the HRI as an owner-occupier, the work must be carried out on your principal private residence. As noted above, landlords can qualify in respect of work done on their rental properties.
Whether you are a homeowner or a landlord, you must be up to date with your obligations under the Local Property Tax and, if applicable, the Household Charge. You must be paying income tax – whether under PAYE or self-assessment – to avail of the HRI.
Any contractor you use must be registered for Value Added Tax (VAT) in Ireland and be tax-compliant. Revenue has published FAQs for contractors. If several contractors, such as a builder, a plumber and an electrician, carry out qualifying work on your home or rental property, you can combine the cost of the works to make up the minimum qualifying amount – see 'Rates' below.
The type of work that qualifies for the HRI is repair, renovation or improvement work that is subject to VAT at 13.5%. This includes extensions, garages and attic conversions; the supply and fitting of kitchens, bathrooms and built-in wardrobes; fitting of windows; garden landscaping; plumbing, tiling, rewiring, plastering and painting.
If you are having your septic tank repaired or replaced, or are installing a radon gas mitigation solution, these types of work also qualify for the HRI. Work on driveways and on rainwater harvesting systems can also qualify. There are more examples of qualifying work on revenue.ie. If you are unsure about whether your works will qualify, contact your Revenue office – see 'Where to apply' below.
Work that is subject to VAT at 23% (such as architect’s fees) is not covered. Neither are items such as furniture, white goods or carpets.
Homeowners: In general, the work must be carried out and paid for between 25 October 2013 and 31 December 2016*. Qualifying work between 25 October 2013 and 31 December 2013 is treated as if it was carried out and paid for in 2014.
Landlords: In general, the work must be carried out and paid for between 15 October 2014 and 31 December 2016*. Qualifying work between 15 October 2014 and 31 December 2014 is treated as if it was carried out and paid for in 2015.
*However, if planning permission is required and is in place by 31 December 2016, work paid for up to 31 March 2017 will qualify.
The qualifying work must cost at least €4,405 before VAT at 13.5%, which comes to a total of €5,000 with VAT included. You will only get the tax credit in relation to a maximum of €30,000 (before VAT) during the period covered by the HRI.
The minimum credit is €595, based on the minimum qualifying expenditure of €4,405. The maximum is €4,050, based on the maximum qualifying expenditure of €30,000.
If you are claiming a grant for the works, or if they are covered by an insurance claim, the amount of your expenditure that qualifies for HRI will be reduced.
You can claim the HRI tax credit after the end of the tax year if your qualifying expenditure has reached the minimum amount of €4,405 before VAT (a total of €5,000) and you have paid income tax. Any unused tax credit can be rolled over into the following year.
In general, the tax credit is payable over the 2 years following the year in which the work is carried out and paid for. If you are on PAYE, your HRI tax credit will be divided evenly across your pay dates for each of the 2 years that it is payable. If you are a self-assessed taxpayer, it will be included in your self-assessment over 2 years, half the tax credit each year.
For homeowners, 2015 was the first year in which you could claim a HRI credit. For landlords, 2016 will be the first year in which a HRI credit can be claimed.
For you to be able to claim the HRI credit, your contractor(s) must enter details of the work on the HRI online administration system. This system is only accessible to contractors who are registered for VAT and are tax-compliant.
Revenue advises homeowners and landlords to log in to HRI online (see ‘Where to apply’ below) to check that their contractors have correctly entered details of the works and payments.
You should also:
If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000 (Monday to Friday, 9am to 8pm) or you can visit your local Citizens Information Centre.