Changes to mortgage interest relief
The Government unveiled their latest budget to help deal with the economic crisis .The main thrust was to increase taxes as opposed to reducing public expenditure.It is disappointing that more was not done on the expenditure side.
- Mortgage interest relief
Mortgage interest relief will be discontinued for any mortgage over 7 years from 1 May
The level at which interest re-payments can be claimed against tax for residential rental properties is being reduced from the existing 100% to 75%. This measure will apply to both new and existing mortgages. Commercial properties are not affected
Other changes include:
- Income Levy – from 1 May
The income levy rates will be doubled to 2%, 4% and 6%.
The exemption threshold will be €15,028. The 4% rate will apply to income in excess of €75,036 and the 6% rate to income in excess of €174,980.
- Health Levy – from 1 May
The health levy rates will double to 4% and 5%. The entry point to the higher rate will be €75,036.
- PRSI – from 1 May
The PRSI ceiling will be increased from €52,000 to €75,036.
- Deposit Interest Retention Tax and Taxes on Life Assurance Policies and Investment Funds
The rates of retention tax that apply to deposit interest, together with the rates of tax that apply to (a) life assurance policies and (b) investment funds, are being increased by 2 percentage points in each case and will now be 25% and 28% respectively. The increased rates will apply to payments, including deemed payments, made from midnight on 7 April 2009.
The capital gains tax rate is being increased from 22% to 25% in respect of disposals made from midnight on 7 April 2009
- Capital allowances
There will be a new tax relief on capital expenditure incurred in the acquisition of Intellectual Property. The details will be contained in the Finance Bill.
Termination of Capital Allowances Scheme for Private Hospitals and Nursing homes. Transitional arrangements will be put in place for projects that are at an advanced stage of development. The Finance Bill will contain further details on this measure.