Mortgage interest relief is it gone?

jonski

He was just looking for a rough estimate .

The Minstrel

On the subject of Mortgage interest relief, I thought Lenihan said something about protecting those who bought at the height of the prices. Are there exceptions to the 7 year rule?

mairead_or

As FTB about to sign for her new abode I'll be happy to get it for a year or 2...personally think it'd be pretty crazy to get a mortgage based on your ability to pay after the interest relief is taken off!!!

Quartet

Ref First Time Buyers Mortgage Relief vs Non First time Buyers

Remember the situation has changed now with FTB rates discontinued after 1st may...

http://www.revenue.ie/en/tax/it/leaflets/tax-relief-source-mortgage-interest-relief.html

In relation to mortgage interest relief, from 1 January 2009, the rate of tax relief for first time buyers will be increased from 20% to 25% in years 1 and 2 of the mortgage and to 22.5% in years 3, 4 and 5. This change will benefit first-time buyers who purchased since 1 January 2005.
The rate for years 6 and 7 will remain at 20%. First time buyers relief ends after year 7. The relief for non-first time buyers will be reduced from 20% to 15%.
First Time Buyer Status:

Anyone registered for Tax Relief at Source as a First Time Buyer in 2005 will benefit from the 2009 Budget changes to the TRS relief rates as 2009 will be their 5th year in this status. As a result they will receive relief at the rate of 22.5% for year 5 of FTB status, and 20% for their final two years.
Any current FTB who has been a FTB since 2004 or 2003 and is therefore entering their 6th or 7th year as a FTB will neither gain nor lose as they will continue to enjoy the FTB relief rate of 20% (as they do now) for their final years as FTBs.
Non-first time buyers and those current first time buyers who are now in their 7th year of this status will receive relief at the reduced rate of 15% from the 1st January 2009.

mollypop

astrofool wrote: »

If either buyer is not an FTB, then first time buyers interest relief does not apply to either.

If you buy/sell a house, you lose your FTB status also, and the increased level of relief.

Is this true, seems really unfair? My partner bought an apt 3 years ago, now we're buying a house together, obviously a much bigger mortgage. So he'll loose his FTB status, and I won't ever be entitled to relief as a FTB even though I never owned a property before and never paid a mortgage before??

faceman

astrofool wrote: »

If either buyer is not an FTB, then first time buyers interest relief does not apply to either.

If you buy/sell a house, you lose your FTB status also, and the increased level of relief.

Are you sure about that? Im getting conflicting information on it. According to the Revenue if you buy another house but are still within the 7 years then you carry over your interest relief status.

astrofool

mollypop wrote: »

Is this true, seems really unfair? My partner bought an apt 3 years ago, now we're buying a house together, obviously a much bigger mortgage. So he'll loose his FTB status, and I won't ever be entitled to relief as a FTB even though I never owned a property before and never paid a mortgage before??

If either partner has bought a property previously, then when you buy a property jointly, FTB status does not apply.

You'll get a lot more information on this board:
http://www.boards.ie/vbulletin/forumdisplay.php?f=38

faceman wrote:

If either buyer is not an FTB, then first time buyers interest relief does not apply to either.

If you buy/sell a house, you lose your FTB status also, and the increased level of relief.

I'm honestly not sure what the status of the interest relief is, if you buy/sell within 7 years, whether you keep your FTB interest relief period, or (now) see interest relief disappear, you are definitely not counted as an FTB for stamp duty calculations.

ejmaztec

It's par for the course that there is still loan interest relief on buy to lets, albeit restricted to 75% of the interest.

When they re-introduced interest relief on buy to lets, this in my opinion was responsible in a huge way for the property boom booming even more. So now, Pat Public is screwed with his mortgage, and it's almost business as usual for the property tycoons (the ones whose tenants haven't fecked off back to Warsaw, Vilnius, or wherever).

Sorted

I sold my home and paid off the outstanding mortgage of 80,000 in September 07. I then - rashly some would say (!) - bought a new house in October 07 and took out a new mortgage for 270,000.

My understanding is that I'll continue to get relief for 7 years from the date I took out the new mortgage.

Anyone know if this is correct???

ejmaztec

It looks like it is 7 years from the date of the new loan.


http://www.revenue.ie/en/press/budget/2009/supplementary/mortgage-interest-relief.html

This from the Revenue Commissioners site


Mortgage Interest Relief
Introduction

The Minister for Finance announced the following changes in relation to Mortgage Interest Relief in his Supplementary Budget speech on 7 April 2009.
What is being curtailed from the 1st May 2009 is the number of tax years in respect of which mortgage interest relief may be claimed – that is, such tax relief may not be claimed on the interest paid on a qualifying home loan in the 8th and subsequent tax years of the life of that loan. All qualifying loans taken out in the 2002 tax year or earlier tax years are in this category.
However, mortgage interests tax relief may be claimed on the interest paid on a qualifying home loan in the first 7 tax years of the life of that loan.

1. the rate at which tax relief is given to first-time buyers is -
   • 25 per cent for tax years 1 and 2;
   • 22.5 per cent for tax years 3, 4 and 5; and
   • 20 per cent for tax years 6 and 7, and
2. the rate at which tax relief is given to non-first-time buyers is 15%

Transitional Measure

For those mortgage holders who will no longer be entitled to mortgage interest relief as a result of this measure from 1st May 2009, relief will be allowed on a pro-rata basis for the first 4 months of 2009, that is, the portion of the relief that may already have been granted in respect of this year. This equates to a maximum relief amount for 2009 of €1,000 @ 15% for single individuals and €2,000 @ 15% married/widowed individuals.
In addition, where a new qualifying loan is taken out by such an individual between 1 May 2009 and 31 December 2009, only a proportionate amount of the annual maximum relief limit will be available in 2009 and the full annual maximum relief limit will be available for the tax years 2010 to 2015.
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 1 January 2009 to 30 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 1 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 remains entitled to the tax relief for the seven tax years 2006 – 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.
In this scenario, John has had the benefit of tax relief on the interest paid on the original mortgage from 2001 until 30 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).
However, John is entitled to tax relief 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.
In this scenario, 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%.
However, the maximum amount of interest qualifying for relief is:

• 2009 - €2,000 (i.e 8/12’s of the annual €3,000 maximum from 1st May 2009)
• 2010 to 2015 - €3,000 per annum

Sorted

Thanks ejmaztec. Looks like I may be Adrienne in Example 4! Mind you, my new loan was taken out just a few weeks after paying off my old one but I don't suppose that makes a difference.

MickDundee

mollypop wrote: »

My partner bought an apt 3 years ago, now we're buying a house together, obviously a much bigger mortgage. So he'll loose his FTB status, and I won't ever be entitled to relief as a FTB even though I never owned a property before and never paid a mortgage before??

If your partner had his first mortgage 3 years ago (2006) he is still classed as a FTB (Year 4 of the Relief 22.5%). As you will be starting your first mortgage this year (2009) you are also classed as a FTB (Year 1 of the Relief 25%).

Neither of you lose your FTB status until after 7years, but because you started your mortgages at different stages you are on different rates.