Q.  I’m confused about the changes that were made to Mortgage Interest Relief in Budget 2010. I’m a first-time buyer in year 4 of my mortgage. When will my entitlement expire and what rate of relief am I entitled to?

07.02.10

Tax relief for home mortgage interest is not given through the PAYE system but is instead granted at source (called tax relief at source, or TRS). Your mortgage repayments are reduced by the amount of the tax credit due. In Budget 2010 it was announced that qualifying loans taken out before 1 July 2011 will continue to get relief for seven years and that transitional measures would be provided for qualifying loans taken out between 1 July 2011 and the end of 2013. This means that anyone whose entitlement to relief was due to expire in 2010 or after will continue to qualify for relief at the applicable rate up until the end of 2017. The relief will be abolished completely by the end of 2017. In January 2009 the rate of mortgage interest relief for first-time buyers was increased from 20% to 25% in years 1 and 2 and to 22.5% in years 3, 4 and 5. The relief remained unchanged at 20% for years 6 and 7 of the mortgage. For non-first time buyers the rate of mortgage relief was reduced from 20% to 15%.

For you as a first-time buyer in year 4 of your mortgage you are currently due a 22.5% tax relief on the interest element of your mortgage repayment. For example, if the interest portion of your mortgage is €500 per month, your mortgage lender will reduce your mortgage payment by €112.50 per month. You will continue to get mortgage interest relief at 22.5% for year 5 of your mortgage and you will then get relief at 20% up until 2017 when the relief will be abolished. 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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