One of the largest estate agents in Ireland has launched an internal investigation after a home buyer was offered a “split” sale for a new build home, in order for it to qualify for the Help to Buy scheme.
The Help to Buy (HTB) scheme is administered by Revenue, and provides a refund on income tax of up to €30,000 to first-time buyers on new-build properties up to a value of €500,000.
The tax refund that the buyer qualifies for is paid directly to the contractor, who must be approved by Revenue.
The new-build unit in question was a show house in the Altidore estate in Newtownmountkennedy in Co Wicklow.
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It was built by developer DRES Properties and was on sale for €525,000, some €25,000 above the HTB cap.
In April of this year, a prospective buyer contacted Sherry FitzGerald asking if the developer would consider selling this house for €500,000 so it would qualify for the Help to Buy scheme, emails seen by The Irish Times show.
The agent responded to say that it would not qualify for the scheme, “as it is priced over the cap”.
However, when the same buyer contacted the agent again in June inquiring about the next phase of homes there, an offer was made on the show house.
The agent said the price of the home had been split so that it qualified for HTB.
“The split is €500,000 for the house and €25,000 for the flooring. You cannot use your mortgage amount for the €25,000, this has to be part of your own funds,” the Sherry FitzGerald agent said in an email.
When the prospective buyer said they felt spending €25,000 on flooring did not seem reasonable, the agent replied to say that “we will offer the property to the next person on the list looking for HTB”.
Responding to the interaction, a spokeswoman for Sherry FitzGerald said the company “has launched an internal investigation into the matter in question”.
“At this point, we believe that this is an isolated incident relating to a single property,” she said. “Our client is not privy to any negotiations with any prospective buyer.
“Following the conclusion of our investigation, we will take whatever steps are necessary to ensure that such a situation cannot occur again.”
When asked about this “split deal” offer, Revenue said that while it could not comment on individual cases, what was outlined in this scenario amounted to “artificially splitting” the sale price in order to qualify for the scheme.
“Properties with a final value exceeding €500,000 do not qualify for the Help to Buy scheme. This threshold includes all payments made in connection with the property, whether made directly to builders, through staged instalments, or via separate agreements for upgrades, modifications or additions,” the statement said.
Revenue said it takes “any attempt to bypass or understate the full value of a property extremely seriously. Splitting payments, omitting costs, or structuring arrangements to artificially remain below the threshold constitutes noncompliance”.
It went on to outline the possible implications in such a scenario for the developer, the estate agent and the purchaser who makes the HTB claim.
Where a developer has failed to provide Revenue with the correct purchase value of the property, the developer can be liable to a penalty of €3,000 and Revenue will “consider whether it removes the authorisation for the developer to operate within the HTB scheme”.
It also said that a developer or estate agent who “knowingly assists” someone in making a false claim “may be guilty of an offence and liable to a fine of €5,000 and/or up to 12 months prison for a summary conviction, or a fine of €126,970 and/or up to 5 years prison on conviction on indictment”.
They may also face penalties and prosecution as well as an investigation into their tax affairs, Revenue said.
In terms of the purchaser who makes the HTB claim, applicants found to be concealing the full cost of a property can expect “withdrawal of HTB relief” and “further enforcement action”.
The developer DRES Properties did not respond to a request for comment.
