Latest news with #DepositInterestRetentionTax
Irish Examiner
18-05-2025
- Business
- Irish Examiner
Under 3% of recipients have had to return Help to Buy payment
Less than 3% of first-time buyers utilising the Help to Buy (HTB) scheme over the last five years have had to either return the assistance payment or have Revenue claw it back over failing to meet the criteria, the finance minister has said. The HTB scheme was first introduced in January 2017 in order to help support first-time buyers to either buy a newly-built house or apartment or self build a new home. The scheme gives a refund of income tax and Deposit Interest Retention Tax paid in Ireland over the previous four years in order to help purchase the home. The scheme only applies to properties that cost €500,000 or less and the buyer must live in the property as their primary residence. In response to a parliamentary question on the matter, finance minister Paschal Donohoe said that in order to avail of the HTB payment, a home must be occupied for a minimum period of five years by the first-time buyer as their only main residence. 'Where this condition is not met the HTB payment has to be repaid to Revenue,' the minister said. Where occupation ceases within the five-year period, the HTB claimant is required to notify Revenue accordingly. 'The HTB payment will also have to be repaid to Revenue if, in the case of a self build, the property is not completed within two years of receiving the HTB payment or where it transpires that the claimant was not entitled to claim a HTB payment,' he said. Mr Donohoe said that he has been advised by Revenue that there has been 36,139 HTB scheme claims processed between 2019 and 2024, of which 934 claimants did not meet the relevant criteria, approximately 2.6%, and 'either had the claim clawed back or voluntarily cancelled their claim and returned the payment in the same period'. To qualify for the scheme, a claimant must take out a mortgage which must be at least 70% of the purchase value of the newly built property or the valuation approved by the mortgage provider if the mortgage is for someone building their own home. Under the scheme, a claimant can get relief to the tune of €30,000 or 10% of the market value of a new build property, or approved valuation of a self build property, whichever one is lower.
Irish Independent
05-05-2025
- Business
- Irish Independent
Silent squeeze of inflation the hidden threat to retirement planning as it eats away at our nest eggs
The issue is particularly acute for pensioners who have cash lump sums in the bank or are relying on their savings after leaving the workforce. Research carried out by online savings platform Raisin Bank found that if inflation stays at its current level of around 2pc in this country it would deflate a nest egg of €20,000 to just €16,600 in 10 years. The bank said inflation was a hidden threat to post-retirement planning. If inflation continues at the historical level it has been at for the past 50 years then €20,000 today would be worth just €13,000 in the next 10 years. The Ireland head of Raisin Bank, Eoghan O'Hara, said: 'Many Irish retirees receive lump sums or maintain cash savings accounts to help fund their lifestyle, cover healthcare costs, or prepare for unexpected expenses. 'But few realise how quickly inflation can shrink those savings unless they're earning a return that keeps up.' Mr O'Hara said that if left unprotected, even modest inflation can diminish the buying power of retirement lump sums or emergency funds meant to last years. He said workplace pensions are designed for long-term growth and can include inflation-linked elements. But cash savings, such as those held in low-interest demand deposit accounts, are far more vulnerable to inflation's silent squeeze. Inflation measures the rise in the cost of living over time. Even at a modest rate, inflation reduces the real value of your savings, making it vital to plan accordingly In Ireland, historical inflation rates over the past 50 years have averaged roughly 4.35pc year over year. The current economic policies of the European Central Bank aim to maintain a 2pc target. Mr O'Hara said: 'Even at a modest rate, inflation reduces the real value of your savings, making it vital to plan accordingly.' Statisticians at Raisin Bank used historical inflation rates and calculated that €100 today would be worth only €65 in 10 years. And the €100 would be worth just €43 in 20 years' time. However, under the 2pc target scenario, the decline is less severe. In that case, €100 will be worth €82 in 10 years, and €67 in 20 years. Mr O'Hara said this demonstrates how even small percentage differences compound over time, affecting retirement funds. He said that for those in their 30s and 40s, the challenge to retain value when building up retirement savings is even greater. With 26 to 36 years until retirement, inflation can dramatically alter expectations. A 30-year-old planning to retire at 66, experiencing a 4.35pc inflation rate, would see the purchasing power of €100 today shrink to around €21.5 by retirement. Mr O'Hara said taxation also plays a role in reducing post-inflation gains. In Ireland, Deposit Interest Retention Tax (Dirt) further diminishes real returns on savings accounts. When adjusted for tax, returns on low-yield savings can fall below inflation, leading to a loss in real value. This makes tax-efficient investment options within pension schemes even more critical, he said. Relying solely on low-return cash accounts is risky due to inflation's erosive effects. Instead, pensions and investments should be structured to deliver real, or inflation-adjusted, growth, Mr O'Hara said. Raisin Bank said average historical Dirt-corrected savings rates for term deposits are a full percentage point higher than the rates for demand deposits.
