Deposit Interest Retention tax (DIRT)
DIRT is an amount of tax deducted at source from interest that is paid on money you save in certain financial institutions.
An application for a DIRT refund may apply when you purchase or self-build your first house or apartment to live in.
To avail of the refund the following conditions must be met:
- You must be a first-time buyer of a house or apartment who purchases or self-builds a property between 14 October 2014 and 31 December 2017.
- You must not have either individually or jointly, with another person, previously purchased or built a house or apartment.
- If the property is self-built it must be suitable to live in immediately, and you must register the land in your name before 31 December 2017.
- The property must be occupied as your principal private residence. A refund of DIRT is not available for properties bought for investment purposes.
- You may not claim a refund of DIRT under both First Time Buyers’ Relief (FTB) and the Help to Buy Incentive (HTB).
DIRT deducted in the 48 months prior to the purchase date is available for refund. This refund is limited to the DIRT paid on savings up to a maximum of:
- 20% of the purchase price of the house or apartment
- 20% of the completion value of the property for self builds.
Joint claims are permitted if you have bought or self-built the property with another first time purchaser.
You cannot claim if the land is registered under a third party.
How to calculate Deposit Interest Retention Tax (DIRT) relief
The DIRT relief due each year is calculated by using the following formula:
DIRT Paid on interest / 12 months x months applicable for that year
Examples 1 and 2 below show how DIRT is calculated for each of the different cases.
- Example 1.
Mary bought her first house on her own on 31 October 2014 for €200,000. The maximum savings on which relief is due is €40,000 (€200,000 @ 20%). During the four years before the purchase date, 1 November 2010 to 31 October 2014, Mary saved €30,000. She earned gross interest of €455 and paid €155 DIRT on gross interest.