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