VAT on a self-build in Ireland: rates and what to budget

House construction generally carries 13.5% VAT, while separately bought materials are generally 23%, with exceptions. As a private individual building your own home, you cannot reclaim that VAT, so use VAT-inclusive figures throughout your budget.

Check the rate before accepting a quote

The relevant rates are 23% standard, 13.5% reduced and 9% second reduced. Qualifying heat pump supply and installation is 9%, and qualifying solar contracts can be zero-rated. The two-thirds rule can also change the rate on a supply-and-fit job.

Ask your builder or supplier to state the rate and total VAT on each quote. Rates depend on what is supplied and how the contract is arranged. Confirm the treatment of a large or unusual item with Revenue or a tax adviser before committing to it.

Which rate applies to what

The rates below apply to house-building costs, subject to the conditions shown. Construction of qualifying apartments has a separate 9% rate from 26 November 2025; that does not make 9% the general rate for building a house.

What you buy	VAT and conditions
House construction: building, extending, altering, demolition	Generally 13.5%, subject to exceptions and the two-thirds rule
Building, electrical, plumbing, plastering, heating, painting, roofing and flooring work	Generally 13.5%; check specific exceptions
Supply and installation of a fixture	13.5%, subject to the two-thirds rule
Supply or installation of a fitting, or both	23%
Building materials supplied on their own	Generally 23%, with exceptions below
Ready-to-pour concrete and concrete blocks supplied on their own	13.5%, subject to conditions
Scaffolding supply, hire, or hire and erection	23%
Heat pump heating system, supplied and installed	9% from 1 January 2025
Qualifying solar panels supplied and installed on or beside a private dwelling	0% where the same business is responsible for supply and installation
Solar panels supplied on their own	23%
Installation of solar panels under a separate contract	Generally 13.5%, subject to the two-thirds rule; panels bought separately remain at 23%

Two things in that table catch people out.

The building materials you buy yourself. If you buy block, timber, insulation or sheets directly from a merchant, the merchant charges 23% unless the item is in the narrow exceptions (concrete and blocks on conditions). If your builder supplies materials as part of a construction contract, they are generally part of a price for construction services at 13.5%; ask your builder to confirm the rate on your contract. This is why you can see 13.5% on the builder’s invoice and 23% on the merchant’s.

For separately bought concrete, ask the merchant to confirm that the product qualifies under Schedule 3, paragraph 16 (concrete works) and show its VAT rate on the quote. The exception covers ready-to-pour concrete and qualifying concrete blocks, rather than every concrete product; other precast items do not automatically qualify.

Fixtures and fittings. A fixture is integrated into the building so that removal would cause substantial damage or significant alteration to the building or item. Its installation counts as work on the building at the reduced rate, subject to the two-thirds rule. A fitting is an item that can be removed without that damage or alteration: Revenue’s examples include curtains and free-standing appliances. Supplying a fitting, installing it, or both is at the standard rate. If a quote includes both, ask the supplier to identify them using Revenue’s definitions and examples and show the appropriate rates.

The two-thirds rule

When a job mixes goods and labour, Revenue applies the two-thirds rule. All figures are VAT-exclusive:

• If the cost of the goods used is more than two-thirds of the total price, the rate for the goods applies to the whole price.
• If it is not more than two-thirds, the rate for the service applies to the whole price.

Take an invented example: a trade quotes €9,000 excluding VAT to supply and fit a fixture, and the goods cost them €7,000 excluding VAT.

• Two-thirds of €9,000 is €6,000.
• The goods cost €7,000, which exceeds €6,000, so the goods’ rate applies to the whole €9,000.
• At 23%, VAT is €2,070. At 13.5% it would have been €1,215.

If the goods cost €5,500 instead, the service rate applies to the whole price and VAT is €1,215. The difference is €855 on a single job, so the supplier’s actual goods cost matters.

The two-thirds rule does not apply to construction services between connected parties, or where principal contractors account for VAT on services from subcontractors. Connected parties can include relatives, spouses or civil partners, business partners and people or companies linked by control. If you have a relationship like this with the builder, ask a tax adviser to establish the VAT treatment; the worked example and quick check do not cover your situation. The subcontractor case is the reverse charge: the main contractor accounts for the VAT instead of the subcontractor charging it. It operates between your builder and their subcontractors, not on the builder’s ordinary invoice to you as a private homeowner.

The rule uses the supplier’s actual goods cost, not an arbitrary allocation you agree to reduce tax. Ask the supplier to explain the calculation. What you can do is ask each trade, in writing, to show the VAT rate and the VAT amount on every line of the invoice.

Heat pumps and solar panels

From 1 January 2025, supply and installation of a heat pump heating system attracts 9% VAT. Before that date, the work was at the reduced rate, subject to the two-thirds rule. To meet the Building Regulations energy-efficiency rules (Part L), many new homes include a heat pump, so the rate is likely to matter to your budget. Ask your installer to confirm it covers the whole heating system as defined by Revenue, and not just the unit.

Qualifying solar panels supplied and installed on or beside a private dwelling attract 0% VAT where the same business is responsible for supply and installation under one contract. Buying panels alone attracts 23%; a separate installation contract may attract 13.5%, subject to the two-thirds rule. Ask the installer to identify the qualifying contract and show how any other work is taxed. A solar quote is not automatically zero-rated simply because it is for a home.

VAT and the site

Ask your solicitor to confirm in writing whether your site purchase carries VAT and at what rate, before you sign. Add any VAT to the site cost in your budget.

Land and property transactions have separate rules about taxable and exempt sales. A site sold by a builder or developer, or one with a part-built structure, can be treated differently from another plot. The VAT rate on your house construction does not settle the tax treatment of buying the land.

Include VAT in your budget and lender figures

You cannot register for VAT and reclaim the VAT on your house just because you are building it. A VAT-registered business may recover VAT on costs linked to goods or services it sells that are subject to VAT. Some business activities are exempt, meaning VAT is not charged on them; this and private use can limit VAT recovery. If part of the building is for business use, ask a tax adviser or Revenue whether that affects VAT recovery before you start, not after you have paid the invoices.

What you can do:

1. Compare like with like. Make sure every quote says whether it includes VAT and at what rate. A €100,000 quote plus 13.5% VAT costs you €113,500. A quote of €100,000 including VAT costs you €100,000, so it is the cheaper offer. Quotes that look close can differ by thousands.
2. Ask who supplies the materials. If your builder supplies them inside a construction contract, the whole price is for construction services. If you buy them yourself, they are generally at 23%, with the exceptions above. Confirm the applicable rate in either case.
3. Keep invoices. Ask your lender whether its cost schedule requires VAT-inclusive figures. Keep the invoices to support those figures and any later query. See budget and contingency for the cost schedule.
4. Watch the lender’s figures. Ask your lender who must inspect and certify completed work, and which certificate to submit before each stage payment. Make sure the cost you give the lender includes VAT, or you will be short at the end.

Work out what you will actually pay

Use this invented example to check the difference between a VAT-exclusive contract price and the total you must fund. Suppose construction work costs €200,000 excluding VAT.

• At 13.5%, VAT is €27,000 and the price you pay is €227,000.
• If €20,000 of that is actually materials you buy separately from a merchant at 23%, VAT on that part is €4,600 rather than €2,700 at 13.5%, so your total VAT becomes €28,900 instead of €27,000.

Those rates produce different totals even before the underlying price changes. Contract structure can affect the rate, subject to the two-thirds rule and specific exceptions. Ask your builder or a quantity surveyor (a professional who estimates and manages building costs) to produce a VAT-inclusive budget and say which rate they have used for each cost category.

Common mistakes

• Comparing one VAT-exclusive quote with another that includes VAT.
• Assuming that all building materials are at 13.5%.
• Treating a heat pump or solar quote as at one rate without asking.
• Not asking the supplier to confirm their actual goods cost and explain the two-thirds calculation.
• Leaving VAT on the site until after the contract is signed.
• Forgetting that the lender’s cost schedule needs VAT-inclusive figures.

Related guides

• Self-build budget and contingency shows where VAT sits in the cost blocks.
• Help to Buy for self-builders covers the tax refund that can partly fund the build.
• Choosing a builder and contracts covers how a contract states the price and what it includes.
• Self-build mortgage in Ireland explains how the lender uses your cost figures.
• Self-build insurance: confirm with the insurer how VAT should be included in the insured value.

Renovating or extending rather than building new? See renovate, extend or rebuild an old house.