Mortgage interest Relief for first-time buyers is being drastically reduced from 2012. It will be abolished from January 2013 for First Time Buyers
This is not to be confused with Mortgage Interest Supplement – which is a payment to help low income households with mortgage payments.
Mortgage interest relief – also known as as Tax Relief at Source (TRS), is worth as much as €416 a month to first-time buyers . TRS is available on interest payments of up to €20,000 a year . The current rates of TRS relief (2011) for first-time buyers are 25% for the first and second year , 22.5% in years 3, 4 and 5. and 20% for tax years 6 and 7.
After 7 years – you are no longer classed as a first time buyer – and get the lower rate of 15%
From Jan 2012 – the maximum annual amounts of interest that will qualify for relief will be €6,000 for married or widowed people and €3,000 for single people. These ceilings will be the same for first-time buyers and non-first-time buyers
The rates of TRs are alos being reduced in Jan 2012 – the new ates will be 15% for first-time buyers and 10% for non-first-time buyers.
It means that a first-time buyer who purchases a home up to and including the 31 December 2011 will be in line to qualify for up to €31,500 over a seven-year period.
However, a first-time buyer who completes their mortgage on January 1, 2012 will receive a maximum benefit of €6,300.
Maybe now is a good time to buy a house?
Below is a summary of TRS dates and entitlements…
If you took out a mortgage in 2003 or earlier, your entitlement to TRS expired in 2009.
If you took out a mortgage between 1 January 2004 and 31 December 2011,your entitlement to relief will continue until the end of 2017. (After the first 7 years you will be no longer classed as a first time buyer)
If you take out a mortgage between 1 January 2012 and 31 December 2012 you will get the lower rates of relief and lower ceilings on the amounts of qualifying interest.
Mortgages taken out after 31 December 2012 will get no TRS at all.
There was also a proposal to increase the rate of mortgage interest relief to 30% for first-time buyers who took out mortgages in the period 2004-2008. This has yet to be confirmed – and may be in Budget 2012
We’ve been struggling for money since my partner was laid off last year and I only work part time. We’ve fallen into arrears with our mortgage like so many others. I just received a letter from our mortgage company saying that the revenue are cancelling mortgage interest relief for those in arrears and now our mortgage payment is an extra 160 euro per month. Is this right? Can the revenue do this? I’m at my wits end. I can’t make the regular payment never mind another 160 on top of it.
Mary – is it Interest Relief you are talking about or is it Mortgage Interest Supplement.
If you are on low income you should be entitled to Mortgage Interest Supplement – which should help.
I have not heard of Interest Relief being stopped if you are in arrears. Call Revenue on TRS Helpline 1890 46 36 26 to check .
“It means that a first-time buyer who purchases a home up to and including the 31 December 2011 will be in line to qualify for up to €31,500 over a seven-year period.”
I’ve read elsewhere that to qualify for the higher 2011 rate, you not only need to close the purchase before the 31st but you need to have made your first mortgage repayment before the 31st too. Do you know if this is true as you could close the purchase in December but not have the first repayment until January 2012?
I am also curious to see if anyone knows same as Garys response above. I was told I actually had to pay interest in 2011. I am also doing a self build so wondering if even if I drew down first installment this year would the whole mortage qualify for the current rates of relief or only that stage payment drawn down in 2011.