Interest Portion of Mortgage Loan Repayments

Mickey Dazzler

I was hoping someone could help me.

I am in the process preparing my tax return and have a rented property. 2012 was the first year I rented it out and I would like calculate my tax obligations.

It states that 75% of the interest portion of my loan is deductible. I have asked the bank for an interest statement but it wont be here for 5 days and I just want to do some rough calculations in the meantime.

My mortgagee repayments are E1266 per month. Total outstanding is 260,000 approx and I have about 28 years left on the mortgage.

I am not look for exact figures, just a ball park figure to give me an idea.

Could anybody give me a rough idea of what the interest portion of my loan would be?

Many thanks.

D3PO

Mickey Dazzler wrote: »

I was hoping someone could help me.

I am in the process preparing my tax return and have a rented property. 2012 was the first year I rented it out and I would like calculate my tax obligations.

It states that 75% of the interest portion of my loan is deductible. I have asked the bank for an interest statement but it wont be here for 5 days and I just want to do some rough calculations in the meantime.

My mortgagee repayments are E1266 per month. Total outstanding is 260,000 approx and I have about 28 years left on the mortgage.

I am not look for exact figures, just a ball park figure to give me an idea.

Could anybody give me a rough idea of what the interest portion of my loan would be?

Many thanks.

I don't see the point in a rough idea when you will have the statement in five days

besides which do you not have internet banking ? Not hard to figure out how much interest you paid last year by checking your internet banking.

P.S 75% is only deductible if you have registered your tenancies with the PRTB. So I hope you did that

The_Conductor

If you give us your interest rate, its fairly easy to work it out for you. Without the rate- its a case of how long is a piece of string.

Note- your interest rate normally changes when you move from owner occupied to rented out- owner occupiers get preferential rates.

Moonbeam

What interest rate do you pay?
5% ? 6? 4? 1?

3DataModem

The_Conductor wrote: »

If you give us your interest rate, its fairly easy to work it out for you. Without the rate- its a case of how long is a piece of string.

Note- your interest rate normally changes when you move from owner occupied to rented out- owner occupiers get preferential rates.

No you can calculate the interest rate - and therefore the interest portion - from the information given.

3DataModem

Mickey Dazzler wrote: »

I was hoping someone could help me.

I am in the process preparing my tax return and have a rented property. 2012 was the first year I rented it out and I would like calculate my tax obligations.

It states that 75% of the interest portion of my loan is deductible. I have asked the bank for an interest statement but it wont be here for 5 days and I just want to do some rough calculations in the meantime.

My mortgagee repayments are E1266 per month. Total outstanding is 260,000 approx and I have about 28 years left on the mortgage.

I am not look for exact figures, just a ball park figure to give me an idea.

Could anybody give me a rough idea of what the interest portion of my loan would be?

Many thanks.

Assuming 28 years, 260k, and 1266 per month, your interest rate is very close to 4%.

Simple calculation from there; 4% x 260k = 10,400 per annum = 866 per month in interest. This number drops every single month, very slightly.

The_Conductor

3DataModem wrote: »

No you can calculate the interest rate - and therefore the interest portion - from the information given.

Depends on the annuity ratio- and how it varies- which will vary from lender to lender. From the information given- it could be a somewhere between 3.8% and 4.1%
I would also hazard from these rates- that its unlikely to be an investor rate.

I did say its easy to work it out with the rate- without the rate- all you can do is an indicative calculation (which may be quite accurate- but you just can't stand over it).

There are online calculators that will allow you reverse calculate the rate, such as this one- but they come with caveats.

3DataModem

The_Conductor wrote: »

Depends on the annuity ratio- and how it varies- which will vary from lender to lender. From the information given- it could be a somewhere between 3.8% and 4.1%
I would also hazard from these rates- that its unlikely to be an investor rate.

I did say its easy to work it out with the rate- without the rate- all you can do is an indicative calculation (which may be quite accurate- but you just can't stand over it).

Nonsense.

If the monthly gross repayment is exactly 1266 from now to maturity, the balance is exactly 260k and the term to maturity is exactly 28 years then the APR is almost exactly 3.93%.

The_Conductor

3DataModem wrote: »

Nonsense.

If the monthly gross repayment is exactly 1266 from now to maturity, the balance is exactly 260k and the term to maturity is exactly 28 years then the APR is almost exactly 3.93%.

We don't do fixed rate, fixed term mortgages in this country- unlike most of Europe- so thats one presumption that isn't valid.

That aside- if it were a fixed payment mortgage of 1266 from now to maturity, with a balance of exactly 260k and a term to maturity of exactly 28 years- it would work out at just under 3.86% (according to two online calculators I've just checked- incl. the one I linked to earlier).

3DataModem

The_Conductor wrote: »

We don't do fixed rate, fixed term mortgages in this country- unlike most of Europe- so thats one presumption that isn't valid.

That aside- if it were a fixed payment mortgage of 1266 from now to maturity, with a balance of exactly 260k and a term to maturity of exactly 28 years- it would work out at just under 3.86% (according to two online calculators I've just checked- incl. the one I linked to earlier).

I'm not assuming fixed rate; my result also applies to variable rate. When I said "from now to maturity" I meant without moratorium or discount.

A straight variable rate or tracker rate fits my calc too. The actual repayment today for a tracker or variable is only dependant on interest rate (APR), time to maturity, and balance today.

I didn't use an online calculator, I did it by hand.

GetWithIt

D3PO wrote: »

P.S 75% is only deductible if you have registered your tenancies with the PRTB. So I hope you did that

This.

Putting my Poirot moustache on; having 28 years left on the mortgage doesn't sound like a recently purchased property. I'd guess it was bought 7 years ago. The monthly mortgage mortgages may include mortgage interest relief which would significantly skew the interest figures guesstimated previously.

You would need to state the interest rate to get an accurate answer. Figures may vary wildly from the real numbers otherwise.

Assuming you have registered, I'd be surprised if you incurred much, if any, tax liability. If you haven't registered your liability would be significant.

StillWaters

GetWithIt wrote: »

This.

Putting my Poirot moustache on; having 28 years left on the mortgage doesn't sound like a recently purchased property. I'd guess it was bought 7 years ago. The monthly mortgage mortgages may include mortgage interest relief which would significantly skew the interest figures guesstimated previously.
.

You can't claim MIR on a property you are renting out, and as OP is tax compliant, the assumption is the figure excludes MIR.

D3PO

StillWaters wrote: »

You can't claim MIR on a property you are renting out, and as OP is tax compliant, the assumption is the figure excludes MIR.

Big assumption this is the OP's first year filing returns, which means they plan to be tax compliant but does not mean that they are compliant thus far.

Given the approx interest rate is that of an owner occupier and not an investor its fair to assume they haven't told the bank they are renting out, which then means its also fair to assume they are still receiving MIR which they should not be.

So as they are uncompliant on those two fronts its not a stretch to think they have failed to register with the PRTB

StillWaters

In which case those two issues need to be resolved before a tax return is submitted.

D3PO

which is why I mentioned it as an aside in my first post