Mortgage Interest Relief

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Interested in banking that little bit extra - First Time Buyers Beware!

Something that’s come to my attention which I feel isn’t widely known is the fact that mortgage interest relief for mortgages taken out after 31st December 2012 will no longer be allowed. This is something I know more about personally, as I struggle to fund for my first new home, than something that has got wide coverage in the media.  The highly publicised move by the government to help aid first-time buyers who bought their sole or main residence in the years 2004 to 2008 has glossed over the fact that they will be abolishing the relief in full by 2017!

The mortgage interest relief rates for first time buyers if you take out a mortgage in 2012 are:

Year 1 2012    25%

Year 2 2013    25%

Year 3 2014    22.5%

Year 4 2015    22.5%

Year 5 2016    22.5%

Year 6 2017    20%

The rate of mortgage interest relief is 15% if you are not a first-time buyer

So let’s take a basic example. Say you are a first time buyer and you purchase a property in January 2012 for €300,000 and are paying 3% interest per annum. The mortgage interest relief for 2012 will be €2,250 (€9,000 * 25%) in year 1 and year 2 and €2,025 for year 3, 4, 5 and €1,800 for year 6. Over the six years this could be a total saving of €12,375.

The amount of mortgage interest on which you can get relief is subject to upper limits or ceilings. The ceiling that applies to you depends on whether you are single; married; widowed; in a civil partnership; or a surviving civil partner.

The following are the ceiling amounts for tax year 2012:

	Single	Widowed/Surviving civil partner/Married/in a civil partnership
First-time buyer	€10,000	€20,000
Non-first-time buyer	€3,000	€6,000

I’m not saying to go rush out and purchase your first home before the deadline but this is definitely something worth considering if you are actively looking at the housing market. With house prices apparently hitting their lowest yet, 2012 could be the time to make that leap and avail of all the tax reliefs available to you. Who know’s the government could do a U turn on the deadlines in place but I wouldn’t be banking on it!

For more information on mortgage interest relief go visit the revenue website http://www.revenue.ie/en/online/mortgage-interest-relief.html or the citizens information website at http://www.citizensinformation.ie/en/housing/owning_a_home/buying_a_home/mortgage_interest_relief.html

Declan Moore is Manager - OSK Audit

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