Mortgage Interest Relief - is this right?

Senna

OK i think i know the answer to this, but just wanting confirmation.

Your FTB's Mortgage interest relief is for a Tax year (calendar) only, so if i take out a mortgage in December then that a whole year used up and January's repayment is the start of year 2. Seen the relief has been up'd in the budget it would be very costly to take a mortgage out in November or December.

thesteve

Oh god tell me that isn't so...

thesteve

Damn it, called the revenue, that is the case!

Ste.phen

But wouldn't you get a huge refund next year based on the tax you paid in 2008?
Surely if December counts as 'year 1' you also get a full year's relief?

musicfan

My understanding is, you will get back 20% of the interest you have paid (I know this is gone up now but for this year.........)

So say, if you take out a mortgage in November, and pay €500 interest per month, you only get 20% of the interest amount back so you will get back €100 per month. (20% of 500). If you don't get this back in November eg if its not sorted out in time with Revenue, you will get the €200 back in December - am I right?

To qualify for the whole amount in 2007, you would have had to have paid €10K in Interest, so I've taken out my mortgage in August and only pay €6K interest, I will only get back 20% of the 6K?

Now, what happens if 2 FTB's (both single) take out one mortage, say in September, a total of 10K is paid in Interest - i.e. they only pay €5K in interest each, do they each get back 20% of the 5K each split over the 4 repayment months in 2007?

Senna

You can get 20% up to 10k for single, 20k for married people.(old rates)

If you take out the mortgage in sept and pay 1k in interest per month, so 4 months in that year, 4k paid in interest, so you get relief of 800euro spread over 4 months, or back dated.

The later in the year you take out a mortgage the more you will lose out on, espically seen the higher amount is in the first years.

But wouldn't you get a huge refund next year based on the tax you paid in 2008?
Surely if December counts as 'year 1' you also get a full year's relief?

But if you take out the mortgage late in the year you're not paying a lot of interest in that tax year. Dec does count as year 1, but you'll only get relief on what you pay, which wont be much in one month.


just seems a strange way of doing it, it should really start from the month you take the mortgage out.

thesteve

Ste.phen wrote: »

But wouldn't you get a huge refund next year based on the tax you paid in 2008?
Surely if December counts as 'year 1' you also get a full year's relief?

Nope, the tax relief is only on the interest paid, so 1 months interest paid, you get 25% back which isn't as much as 25% back of 12 months interest paid...

Anyway after some ringing the revenue and ICS and arguing with ICS to get them to delay my first payment for 4 weeks until January (which they refused to do), I discovered that the date by which they decide on your first TRS year is based on the day you draw down your mortgage, not when you make your first repayment...

So I'm getting screwed...

musicfan

thesteve wrote: »

Nope, the tax relief is only on the interest paid, so 1 months interest paid, you get 25% back which isn't as much as 25% back of 12 months interest paid...

Anyway after some ringing the revenue and ICS and arguing with ICS to get them to delay my first payment for 4 weeks until January (which they refused to do), I discovered that the date by which they decide on your first TRS year is based on the day you draw down your mortgage, not when you make your first repayment...

So I'm getting screwed...

My mortgage was drawn down in August, first paymetn due 30 Sept, taken from the bank 4 October.

On this basis, is my TRS calculated on 5 months (Aug - Dec), 4 months (Sept - Dec), or 3 months, (Oct to Dec).

Do I only calculate the interset on the actual payments made in 08 - so the payments made in Oct, Nov and Dec - and work out what I am entitled to based on 20% of the interest paid on these 3 payments?

thesteve

5 months : aug- Dec according to the info I got yesterday. The relief is on the interest accrued during the period and not paid, hence it begins building up from the draw down date.

S

daisling

I am buying an affordable house and the contracts are due to be sent during first week in december and closing before christmas. What can I do to stop loosing all that money? Advise please

thesteve

Close on the 1st of Jan

lynchie

TRS begins when you pay your first mortgage payment. I closed in December when I bought my house but only paid my first repayment on 31st Jan. When I filled in the TRS form I stated Jan as the start date so I got the full year's benefit.

daisling

lynchie thanks the council are in a hurry to get sales closed as there have been a number of delays. They want people in before christmas. I will have to call revenue and confirm.

thesteve

Lynchie, you were very lucky. I was speaking to 4 people on the TRS helpline and about 3 in my mortgage company before I discovered the truth.

I closed in Oct, first payment in December. I asked if the payme nt could be delayed till Jan to start the TRS in 2009. After that many calls I was informed by the revenue that it goes on the closing date and NOT the first payment date as the interest begins accruing from the draw down date and not the first payment date.

I said what if I submit the form again with an incorrect closing date (as in put it in Jan), and they told me in that case the application for TRS would be refused.

Saying that, the revenue did tell me they had leeway if it was close to Jan. So my closing date being Oct I was screwed... So it looks like yours fell through the cracks you lucky f.....

lynchie

thesteve wrote: »

Lynchie, you were very lucky. I was speaking to 4 people on the TRS helpline and about 3 in my mortgage company before I discovered the truth.

I closed in Oct, first payment in December. I asked if the payme nt could be delayed till Jan to start the TRS in 2009. After that many calls I was informed by the revenue that it goes on the closing date and NOT the first payment date as the interest begins accruing from the draw down date and not the first payment date.

I said what if I submit the form again with an incorrect closing date (as in put it in Jan), and they told me in that case the application for TRS would be refused.

Saying that, the revenue did tell me they had leeway if it was close to Jan. So my closing date being Oct I was screwed... So it looks like yours fell through the cracks you lucky f.....

Just had a look at the TRS1P form on revenue's site and all it asks for is the date of the 1st loan repayment on the mortgage, not the closing date?

daisling

Spoke to the revenue TRS helpline earlier and they confirmed that if you close in December and first repayment is not until Jamuary then 2009 will be year 1 not 2008. So now I have to find money for christmas decorations too!