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. With effect from 1 January 2017, HRI has been extended to local authority tenants who have written consent from the local authority to carry out the works.

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 two years. This effectively reduces the rate of VAT to zero on qualifying work, up to a value of €30,000.

In order to qualify for the HRI, the work must be done between 25 October 2013 and 31 December 2018 for homeowners; between 15 October 2014 and 31 December 2018 for landlords; and between 1 January 2017 and 31 December 2018 for local authority tenants.

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, which must be registered with the Residential Tenancies Board.

You must be paying income tax - whether under PAYE or self-assessment - to avail of the HRI.

If you are a homeowner or a landlord, you must be up to date with your obligations under the Local Property Tax.

If you are a local authority tenant, you must get prior written consent from the local authority to carry out the works.

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.

Qualifying work

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 2018. 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 2018. Qualifying work between 15 October 2014 and 31 December 2014 is treated as if it was carried out and paid for in 2015.

Local authority tenants: The work must be carried out and paid for between 1 January 2017 and 31 December 2018. Prior written consent is required from the local authority to carry out the works.

Further information

Revenue has published general information about the HRI and specific information for homeowners and landlords, as well as a guide for homeowners and landlords (pdf) and a guide for contractors (pdf). There is also detailed information in Revenue's Tax and Duty Manual (pdf).

Information will be available shortly on how local authority tenants can claim HRI relief. In the meantime, local authority tenants can contact their Revenue office for further information.

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.

Claiming the credit

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 two 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 two years that it is payable. If you are a self-assessed taxpayer, it will be included in your self-assessment over two 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 was the first year in which you could claim a HRI credit

For local authority tenants, 2018 will be the first year in which you can claim a HRI credit – this will be for payments made in 2017. Further information will be published shortly. In the meantime, you should contact your Revenue office for information.

Details of the work

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 applicants 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.

Checklist

You should also:

• Ensure that you have paid or arranged to pay any Local Property Tax (LPT) that is due
• Check that your contractor has a VAT number and is tax-compliant
• Ensure that the work qualifies – see 'Qualifying work' above
• If you are a local authority tenant, get written authorisation from the local authority before getting any work done
• Keep all supporting documentation – tax clearance certificates, estimates, receipts etc.
• Give the contractor the LPT Property ID of your property but not your LPT PIN or your Personal Public Service Number

This scheme enables local authorities to improve or extend privately owned houses as an alternative to providing local authority housing. Carrying out the work must satisfy your housing need and result in your removal from the housing waiting list.

It is aimed at:

• Owner-occupiers whose homes are overcrowded or sub-standard and who cannot afford to carry out improvements and
• Local authority tenants, people on the housing list, tenant purchasers or housing association tenants who want to move into a home owned by a relative but cannot because the home is sub-standard or too small.

If you qualify, the local authority will carry out works to adapt the house or to provide extra bedrooms. The local authority will pay the full cost of the works carried out and you will then pay a charge to the local authority for a maximum of 15 years. If during the 15-year period, you have paid an amount equal to the total cost of the works, the charge will stop.

The charge will be worked out in a similar way to the differential rent scheme for local authority rents, so it is based on your ability to pay.

You may qualify if you are:

• Registered on the local authority housing waiting list
• A local authority tenant or a tenant purchaser and you want to buy a private house and return your present house to the local authority
• A tenant for more than one year of a home provided by a housing association under the Rental Subsidy Scheme and you want to buy a private house and return your present house to the local authority.

The local authority will take into account the urgency of your housing needs and the cost-effectiveness of the proposal when deciding whether to improve your house or your relative's house.

You can sell the house at any time. However, if you do so during the 15-year period of charges or before your total payments equal the cost of the works, you will have to make a repayment to the local authority.

Contact your local authority to check whether this scheme operates in your area.