Help to Buy clawback: selling, moving out or letting within five years

Help to Buy comes with one condition that lasts after you move in. You must live in the home for five years. If you do not, Revenue can take back some or all of the refund. This is called a clawback.

This guide explains what triggers it, how the amount is worked out, and the situations where it does not apply. For the scheme itself, read the Help to Buy scheme guide.

A worked example first

Ciara got a Help to Buy refund of €25,000 when she bought a new house. She moves out and sells it after two years and three months.

She lived in the home for two full years out of the five. Three of the five years are left. Revenue can claw back three fifths of the refund.

Three fifths of €25,000 is €15,000. That is the amount she repays. The other €10,000, for the two full years she lived there, she keeps.

What the five-year rule says

The rule is in section 477C of the Taxes Consolidation Act 1997. It says the home must be your main home for five years from the date you first live in it. The clock starts on the day you move in, not the day you sign contracts or the day the refund is paid.

Three things break the rule:

• You sell the home.
• You move out and live somewhere else.
• You let the home to a tenant.

Any one of them within the five years can trigger the clawback. You must tell Revenue when it happens.

How the clawback is worked out

Revenue takes back a share of the refund based on the full years you did not live there. The table shows the pattern.

The share is applied to the refund you received, not to the price of the home or to any gain you made on it.

A second example. Dara and Sam received €30,000. They sell after four years and one month. They lived there four full years. One fifth of €30,000 is €6,000. They repay €6,000 and keep €24,000.

Check the figure for your own case against Revenue's guidance. The Help to Buy calculator gives you the refund the rule applies to.

Selling within five years

Selling is the most common trigger. People's lives change: a new job in another county, a growing family, a separation.

The clawback comes out of your sale. Tell your solicitor (check the Law Society's register) early, so they can allow for it in the closing figures. Your conveyancing solicitor will be paying off your mortgage from the sale money, and the clawback is a separate payment to Revenue that you make yourself.

You do not need Revenue's permission to sell. You need to tell Revenue and pay what is due.

If the home was your main home for the whole time you owned it, there is no capital gains tax on the sale. Capital gains tax is a tax on the profit when you sell something. Principal private residence relief covers a home you lived in. The clawback is a different thing from that tax.

Moving out without selling

If you move out and keep the home empty, or let a family member live there, the home is no longer your main home. The rule is broken from the date you move out. The same table applies.

Short absences are different. A few months working away, with the home kept as your base, is not the same as moving out. If the absence is long or you set up a home elsewhere, ask Revenue before you assume it is fine.

Letting the home

Letting the whole home to a tenant breaks the rule. It stops being your main home.

Renting a room while you still live there is different. The rent-a-room scheme lets you earn up to a limit tax-free from a lodger in your own home. The home stays your main home, so the Help to Buy rule is not broken. Revenue's own page confirms which arrangements count.

If you are thinking of letting because of money trouble, talk to MABS, the free money advice service, before you decide. The money help page lists the free routes.

Situations where the clawback is reduced or not applied

Revenue's guidance sets out some situations where the normal clawback does not apply in full. They include:

• The death of the person who claimed the refund.
• A sale forced by circumstances Revenue accepts, considered case by case.
• Some separation and divorce situations, depending on who keeps the home.

The guidance is detailed and changes from time to time. Do not rely on a general rule. Ask Revenue through myAccount, or ask your solicitor, before you act. On a separation, DivorceWise explains what happens to the family home.

What to do if the rule is going to be broken

1. Work out the date you first lived in the home.
2. Count the full years from that date to the date you sell, move out or let.
3. Read the share from the table above and apply it to your refund.
4. Tell Revenue through myAccount or ROS. There is a section for this under Help to Buy.
5. Pay the amount within the time Revenue gives.
6. Keep the confirmation.

Interest and penalties can apply if you do not tell Revenue. Telling them early is always the lower-cost route.

The clawback and your deposit

People sometimes ask whether the clawback comes out of the sale price or must be paid in cash. It is a tax debt you owe to Revenue. It is not taken by the buyer or the lender. You pay it from the sale money or your own funds.

If the sale leaves you with less than you owe on the mortgage, that is negative equity. The lender's consent to the sale is needed in that case. The money help page explains where to turn.

The clawback and the First Home Scheme

If you used the First Home Scheme as well, selling within five years also means settling the scheme's share of your home. That is separate from the Help to Buy clawback and is worked out on the value of the home at the time. The First Home Scheme guide explains buying out the share.

Where this leaves you

If you are weighing up a move within five years, check your refund on the Help to Buy calculator and apply the share from the table. The first-time buyer journey covers what comes before and after. If a sale is going ahead, get quotes from a solicitor who can allow for the clawback in the closing figures.