Tax Incentive for Home Improvements

The Government has introduced a scheme whereby 'qualifying expenditure' incurred on works carried out to the principal private residence attracts a tax credit. The work has to have attracted 13.5% VAT and the value of the tax credit is 13.5% of the qualifying expenditure. The credit is claimed over the two years following the carrying out of the work.

As with all of these schemes there are conditions attaching to it.

  1. No tax credits can be claimed if the Local Property Tax hasn’t been paid.
  2. The work has to have been carried out to the Applicant’s principal private residence.
  3. The value of the work must be at least €5,000.00 (excluding VAT) up to a maximum of €30,000.00.
  4. The work must be carried out by a qualifying contractor.

Before starting the work the Applicants must get the approval from the Revenue Commissioners that the works qualify for the scheme.  The following information will have to be supplied to the Revenue Commissioners :-

1. The LPT Number of the property.

2. Address of the property.

3. The name and tax details – VAT Registration Number of the Contractor.

4.  Details of the work he carried out including the estimated cost and VAT payable and the estimated duration of the contract.

If the Application is approved then the Revenue will notify the Contractor as to whether or not he is a qualifying Contractor and also the Applicant.  No works should start or payment be made until such time as this notification has been received.

After a payment has been made to the Contractor the Contractor is obliged to notify the Revenue Commissioners of the payment and the amount thereof referable to this specific approved scheme.  Furthermore the Contractor must issue a VAT Invoice to the Applicant.

When the work has been completed and the last payment made then the Applicant can submit a claim to the Revenue for the tax credit.

In summary, before you embark on the process you should satisfy yourself that the Building Contractor is a qualifying Contractor and that the type of work being carried out qualifies.  You should retain copies of all documentation relating to the Contract.