Definition of a First-Time Buyer
The Central Bank of Ireland defines a first-time buyer (FTB) as “a borrower to whom no housing loan has ever before been advanced”. This definition is not limited to previous housing loans in Ireland, i.e. it extends worldwide.
What Difference does it Make?
Several years ago, there were significant tax-related advantages of being a first-time buyer. Stamp duty fees were lower, and FTBs were given tax relief on mortgage interest (known as tax relief at source, abbreviated to TRS). Nowadays, there are no differences in stamp duty rates between first-time buyers and second & subsequent buyers (SSBs), and TRS was abolished in 2012.
However, there are still a couple of key differences. First, FTBs can avail of the Help to Buy rebate, whereby they can claim a refund of income tax paid up to 5% of the purchase price for a newly built property (subject to a maximum rebate of €20,000, minimum 70% LTV, maximum purchase price €500,000). Second, FTBs require a smaller deposit of 10% of the purchase price, compared to the 20% minimum deposit required for SSBs.
What About a Joint Application with one First-Time Buyer?
The Central Bank clarifies this position as follows: “…where the borrower under a housing loan is more than one person and a housing loan has previously been advanced to any one of those persons, none of those persons is a first-time buyer.”
Property that was Gifted, Inherited, or Bought for Cash
In some cases, a property may have been gifted, inherited, or bought for cash. In such cases, FTB status can be retained for the purposes of the Central Bank lending limits, as a housing loan has not been advanced. If a property was gifted or inherited, you can also qualify for the Help to Buy incentive. However, if a property was bought for cash, then you would not be eligible for the Help to Buy incentive (full details here).