Latest position on mortgage interest relief

01 May 2009
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The following information has been extracted from the Revenue site in relation to the current position on mortgage interest relief.

Changes from 1st May 2009

First Time Buyers [FTBs]
If you are a First Time Buyer, i.e. are in receipt of mortgage interest relief for less than 7 years, you will continue to receive TRS until the end of the 7th year. This includes those mortgage holders where 2009 is the 7th year of relief.

Non First Time Buyers [non FTBs]
If you are a non-first time buyers i.e. you have been in receipt of mortgage interest relief for more than 7 years it would appear, in the absence of detailed information, that you are no longer eligible for mortgage interest relief from 1st May 2009.

First Time Buyers [FTBs] and Non First Time Buyers [non FTBs]
If you are a first time buyer and the other party to your loan is a non first time buyer who ceased to be eligible for relief from 1st May 2009 , you will receive your full ceiling of €10,000 for 2009 while the non first time buyer will receive a ceiling of €1,000 in respect of the first 4 months of the year. This equates to 4/12 of the annual ceiling of €3,000.

Relief Rates:

Maximum Relief Rates
Status Years Ceiling per Year Maximun Relief Relief rate per year
First Time Buyer 1 and 2 €10,000 25% €2,500
First Time Buyer 3,4 and 5 €10,000 22.5% €2,250
First Time Buyer 6 and 7 €10,000 20% €2,000
Non First Time Buyer All 7 years of loan €3,000 15% €450

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Example 1
Keith took out a qualifying home loan to purchase a house in 2001 for €200,000. Keith has had the benefit of tax relief on the interest paid on this loan for

  • the tax years from 2001 to 2008; and
  • for the period 1st January 2009 to 30th April 2009 (subject to one third of the yearly limit on interest relief for the 2009 tax year).

As he has already had the tax relief for 7 tax years, he is no longer entitled to the relief from the 1st May 2009.

Example 2
Mary, a first-time buyer takes out a qualifying home loan to purchase a house in 2006. She switches lender in 2010 in order to obtain a better interest rate.

She is entitled to the tax relief for the seven tax years 2006 – 2012 and so retains her entitlement to tax relief until 2012 as switching mortgage provider will not affect entitlement to the tax relief.

Example 3
John took out a qualifying home loan for €350,000 in 2001. The balance outstanding on the mortgage at 1 September 2009 is €150,000 at which stage John re-mortgages for €250,000. €150,000 of the new loan is used to pay off the existing mortgage and €100,000 is used in the building of a house extension.

John has had the benefit of tax relief on the interest paid on the original mortgage from 2001 until 30th April 2009 at which stage he is no longer entitled to the relief on such interest (as he has already had the tax relief for 7 tax years). John will be entitled to tax relief from 1 September 2009 for the tax years 2009 to 2015 on the interest on that part (i.e. €100,000) of the new mortgage that is used to build the new extension.

Example 4
Adrienne, a single individual, sells her house in October 2008 and clears her existing ten year old mortgage. In September 2009 Adrienne purchases her new residence, financed by a loan of €300,000 plus part of the proceeds of the sale of her previous home.

  • Adrienne will be entitled to tax relief on the interest paid on the new loan for the tax years 2009 to 2015 inclusive at the non-first time buyer rate of 15%.

Example 5
Agnes, a single individual, sells her house in April 2009 and clears her existing ten year old mortgage. In September 2009, Agnes purchases her new residence, financed by a loan of €250,000.
Agnes will be entitled to tax relief on the interest paid on the new loan for the tax years 2009 to 2015 inclusive at the non first time buyer rate of 15%. However, the maximum amount of interest qualifying for relief on this new loan is:

  • 2009 - €2,000 (i.e 8/12's of the annual €3,000 maximum from 1st May 2009 as she has received 4/12's relief up to end April 2009 on her previous mortgage)
  • 2010 to 2015 - €3,000 per annum

Example 6
Kevin took out a qualifying home loan to purchase a house in 2001 for €200,000. Kevin has had the benefit of tax relief on the interest paid on this loan for

  • the tax years from 2001 to 2008 and
  • for the period 1st January 2009 to 30th April 2009 (subject to one third of the yearly limit on interest relief for the 2009 tax year).

In 2007 Kevin and Julie got married. As Julie never had a mortgage before she is now a first time buyer from the year of marriage.

The position for 2009:

  • Kevin has a ceiling of €1,000 (i.e 4/12's of the annual €3,000 maximum)
  • Julie as a first time buyer has a ceiling of €10,000
  • This loan in total has a ceiling of €11,000 for 2009.

As Kevin has already had the tax relief for 7 tax years, he is no longer entitled to the relief from the 1st May 2009. As a first time buyer Julie is entitled to the tax relief for the seven tax years 2007 – 2013. Therefore their ceiling for 2010 – 2013 will be €10,000.

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5. How are the changes being implemented?

Revenue has implemented all of the changes relevant to the January 2009 measures.

In relation to changes for 1st May 2009 the following is the position:

Revenue will only authorise the payment of TRS through the lenders where it is satisfied that entitlement to TRS exists.

First Time Buyers
First Time Buyers who are within the first seven years of their mortgage will continue to get the relief automatically until the end of the 7th year of their mortgage.

Non First Time Buyers
Revenue is working closely with the relevant lenders to identify these accounts and the amount of loan in respect of which TRS is payable under the new rules. Where Revenue is in a position to decide with certainty from the information provided by the lender that an account holder is entitled to TRS then this account will be reactivated for TRS by Revenue.

In the case of non First Time Buyer accounts where it is not clear that they are entitled to TRS, and for whom insufficient information is available to determine entitlement Revenue will write to the account holder during the month of May requesting the necessary information. A prompt reply will ensure that where there is an entitlement to TRS then TRS will be restored and TRS credited to the account. Where Revenue decides, on the basis of the information provided by the account holder that the account holder is entitled to TRS then the payment of TRS will be reactivated by Revenue and any arrears of TRS credited to the account.

TRS for Non First Time Buyers, who are clearly no longer eligible for TRS, is not payable from 1st May.

Unless you receive a letter from Revenue you do not need to do anything.