The good news is that extensions do indeed qualify under the scheme. In order to qualify you also need to fit the following criteria;
- You must be the owner occupier and living in the house, so investment/rental properties do not qualify
- The work must be carried out between 25th October 2013 and 31st December 2015, though if planning permission is approved by December 2015, you have until March 2016 to carry out and pay for the work to still qualify
- The work must cost at least €4,405 before VAT (at 13.5%) and the tax credit is only applicable up to a maximum of €30,000 before VAT over two years
- You cannot avail of the tax credit if your local property tax or your household charge (where applicable) are not up to date
- The contractor carrying out the work will need to be VAT registered and up to date on their tax
It is possible to combine qualifying work from different contractors to meet the amount as well, so for example if you have a plumber, electrician and builder coming in for the extension, these payments can be combined.
Make sure to keep all documentation relating to the work that is being carried out. From the contractor, you should have evidence of their business name and VAT number. You should also check the VAT registered number to make sure it is genuine. You will also need a photocopy of the tax clearance certificate for the contractor, or a photocopy of their most recent RCT Cert to show that they are tax compliant.
From April 2014, an online system will be launced by the Revenue to manage work, payment and claims relating to the HRI. Your contractor will need to fill in details online including the work they are carrying out for you and any payments they receive from you. You cannot claim the HRI if these details are not filled out so this is certainly something to discuss with your contractor to ensure they are completing this.
The tax credit is 13.5% of the net amount, so for example if you spend €10,000 on your extenstion (before VAT), you will receive a credit of €1,350 (10,000 * 13.5%). The tax credit is split over the two years after the year in which the work was done.
Disclaimer: Advice shared in this blog is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.