Q.  I’m confused about the changes that were made to Mortgage Interest Relief in Budget 2012. I’m a first-time buyer who started paying my mortgage in 2006. When will my entitlement expire and what rate of relief am I entitled to?

02.01.12

Tax relief for home mortgage interest is not given through the tax system but your mortgage lender gives you the benefit of the tax relief on the interest you pay. This is called tax relief at source or TRS. Your mortgage repayments are reduced by the amount of the tax credit due.

In Budget 2012 it was announced that qualifying loans taken out after 31 December 2003 and before 1 January 2013 will continue to get relief up to the end of 2017. This means that you will continue to qualify for relief at the applicable rate for the next 6 years. The relief will be abolished completely by the end of 2017.

The rate of mortgage interest relief for first-time buyers is 25% in years 1 and 2 of a mortgage, 22.5% in years 3, 4 and 5, and 20% for years 6 and 7. After 7 years the rate is the same as for non-first-time buyers at 15%.

However, if you are a first-time buyer who started paying your mortgage between 1 January 2004 and 31 December 2008, Budget 2012 provides for a special rate of mortgage interest relief of 30% for the tax years 2012 to 2017. Adjustments to your tax relief should be made automatically by your mortgage lender. You don’t need to claim relief on your annual tax return or to contact your local Revenue office.

Citizens Information: Buncrana 074 9363496; Carndonagh 074 9373741

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