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Who is a
First Time Buyer?
A First
Time Buyer is a person, (or, where there is more than one buyer, each of
such persons*):
-
who
has not on any previous occasion, either individually or jointly,
purchased or built on his/her own behalf a house (in Ireland or
abroad) and
-
where
the property purchased is occupied by the purchaser, or a person on
his behalf, as his/her only or principal place of residence and
-
where
no rent, other than rent under the rent-a-room-scheme, is derived
from the property for five years after the date of the current
purchase.
Is there
provision for any special situations in relation to the scope of the
definition of a First Time Buyer?
Yes. There
are two particular situations where a person is deemed to be a First
Time Buyer.
(a) The trustees
of a trust (to which section 189A of the Taxes Consolidation
Act, 1997, applies), whose trust funds are raised by public subscriptions
for the benefit of permanently incapacitated persons, in respect of the
first house(s) bought after the establishment of the trust, for
occupation by the beneficiary or if more than one, each of the
beneficiaries.
b) A spouse
to a marriage the subject of a decree of judicial
separation, a deed of separation, a decree of divorce
or a decree of nullity in the case of the first
acquisition of a house by the spouse following the separation or divorce
provided that the spouse had, in relation to the former marital home,
-
left
that home;
-
not
retained an interest in that home;
-
whose
separated/former spouse continues to occupy that home, which home
was occupied by both spouses prior to the separation or dissolution
of the marriage.
*Each person who is party to the property contract
must be a First Time House Buyer to avail of the exemption on stamp duty
for example. There is not a provision for splitting on a pro-rata basis.
Mortgage Interest Tax Relief
Mortgage interest tax relief is granted at
source i.e. by the lender. TRS (Tax Relief at Source)
replaces the system where interest relief was
administered through the tax system. The new system means
that the borrower's account will be debited with the
amount of the full mortgage repayment when due and
credited at the same time with the amount of interest
relief.
The relief is limited to the standard rate
of 20% and monetary limits also apply as per Budget 2008:
| Home
Loans – Standard Rate 20% |
| First-Time
Buyer* |
€ |
| Single
Max |
2,000
|
| Married
Max |
4,000
|
| Widow(er)
Max |
4,000
|
*available for up to 7 years
Stamp Duty
The floor space of an exempt property,
must not exceed 125 square metres (1,346 square feet).
All new properties that meet this requirement, are
exempt.
- New Properties larger than 125 sq. metres:
- The duty is payable on the greater of
(a) the site cost or
(b) 25% of the total cost (site cost + building costs)
For
example: If such a property is worth €1,000,000 and the site value
is €350,000, stamp duty is payable on €350,000 at the rate
applicable to that figure, i.e. 3.0% (€10,500) for first-time
buyers, or 6% (€21,000) for others.
Stamp duty is assessed on the VAT
exclusive consideration, Sections 48 and 56 of the Stamp Duties
Consolidation Act 1999 provide that the chargeable consideration for
stamp duty purposes is to exclude any VAT chargeable under Section 2 of
the VAT Act 1972 on the sale or lease.
Where VAT is included in the consideration, it should be deducted
before calculating the charge or rate of stamp duty.
| Aggregate
Consideration |
New
First Time Buyer Rate |
| Up to
€122,000 |
Exempt |
| next €875,000 |
Exempt |
| Balance |
Exempt |
New Houses
First time buyers who
are owner-occupiers continue to be exempt from stamp duty on
new residential property with a floor area of up to 125 square metres.
Partial relief based on the new rate structure outlined above, will
continue to apply to such buyers where the floor area of the property
exceeds 125 square metres.
Incentive
Some lenders offer various
freebies to first time buyers and new customers in
addition to discounted rates.
APR Rate
The Annual Percentage Rate (APR) takes
account of cost outlays that are payable at the beginning
of a mortgage, which are additional to the interest
payable. This is why the APR is higher than the related
standard rate.
The APR is important as it enables
realistic comparisons between the offerings of different
lenders. For example, a special low start-up rate may be
on offer to new customers for a fixed period. As the rate
paid at the outset does not reflect the real cost of the
loan, the APR informs the borrower of the annual
percentage interest rate that may have to be paid in the
future.
RELATED
Irish
house prices year to date
Global Survey: Cost of typical management level house in Dublin, Ireland, could
buy 9 similar houses in Houston, Texas, 3 in Amsterdam, 2 in Sydney and almost
two in Tokyo
Construction and Housing in Ireland Report July 2006: CSO says
Construction Output up 80% in 5 years - Mortgage debt increased from
€33bn in 2000 to €100bn in 2005
Irish housing boom may boost public finances to €9bn this year;
Government collects average of €100,000 in taxes from the cost of every
new housing unit built in State
Irish house prices up 270% since 1996 rising at
average of 14.9% for each of the last ten years;
Construction sector may shed over 100,000 jobs
by 2016
Irish First Time Buyer couples nationally are
spending on average 27% of their income on their
mortgage repayments
State of Chassis: Artificial restriction on land supply puts Ireland
and UK at bottom of property league in Developed World; Irish
urbanisation at 4% is among €pe's lowest
July
2005:
New
Permanent tsb/ESRI home purchase study on Irish First Time
Buyers
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