Harris against increasing Help to Buy tax refund in budget

THE TÁNAISTE SAYS he’s not proposing any changes to the Help To Buy scheme.

It comes as Housing Minister James Browne is reportedly fighting to increase the first-time buyer tax refund to €50,000.

“My job is to follow the programme for government, and my job also is sometimes to say no,” Simon Harris told reporters today.

He said in making the budget, a personal income tax package will be the focus, which “will take up a significant amount of the available resources”.

Currently under the Help To Buy Scheme, first-time buyers can get either €30,000 or 10% of the property’s purchase price, or the amount of income tax and Dirt paid in the previous four years – whichever is lower – to go towards the cost of a home.

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It must be a new build or a building that’s been converted and has not been used as a dwelling previously.

It must also have a purchase value of below €500,000.

Tax package

Public Expenditure Minister Jack Chambers said earlier this week that Budget 2027 will only amount to “a few hundred euro” back, but the Tánaiste told reporters at the Fine Gael think-in that “hundreds of euros” will make a difference.

Harris, who is also the finance minister, has said the current entry point of €44,000 at which workers hit the higher tax rate is “still too low”.

The budget this year will consist of €8.5 billion, made up of €7 billion in additional public spending and a tax package of €1.5 billion in new measures.  

There is speculation that Ireland’s higher tax band will increase by €2,000. This move would cost the government €460 million in its first year, according to statements made by Harris in the Dáil in June.

If the entry point for the higher rate of tax was increased by €2,000 in Budget 2027, the maximum amount an individual earning €46,000 or above could save is €400 annually.

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How much could you get back in your pocket with the potential new income tax cut?

Jointly assessed couples could save up to €800 annually, if both earn enough to enter the higher tax bracket. If only one meets the higher tax threshold, the couple will save €400 annually.

The tax savings will occur because €2,000 of your earnings will be taxed at the lower rate of 20%.

If the higher rate tax band increased by €2,000 year-on-year for the next four years, this would result in savings of €4,000 for an individual or couple on a single income, and up to €8,000 for a two-income couple. 

These figures don’t include PRSI or USC reductions.

Budget 2027 will be laid before Dáil Éireann by Harris and Chambers on Tuesday 6 October.