Tax Relief for Mortgage Interest Paid on a Home Loan

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Apply On-line for Tax Relief at Source

What is Tax Relief for Mortgage Interest on a Home Loan?

Tax relief for mortgage interest on a home loan is tax relief given to mortgage holders based on the interest paid on a qualifying mortgage on your home i.e. a new mortgage for a home, a top up loan used for the purposes of developing or improving your home, a separate home improvement loan, a re-mortgage or a consolidation of existing qualifying loans [i.e. loans used for the purchase, repair or improvement of your home], secured on the deeds of the home.

Since 1 January 2002 the relief is paid at source (called tax relief at source [TRS]) by your mortgage provider rather than the relief having to be claimed back at the end of the year. The mortgage interest relief is given at source, by your mortgage provider, either in the form of a reduced monthly mortgage payment or a credit to your funding account.

You do not have to be earning a taxable income to qualify for mortgage interest relief.

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What is a Qualifying Mortgage?

A qualifying mortgage for the purpose of interest relief is a secured loan, used to purchase, repair, develop or improve your sole or main residence, situated in the State. You can claim tax relief in respect of the interest paid on this loan or mortgage.

You can also claim tax relief in respect of the interest on a mortgage paid by you for your separated/divorced spouse or former partner in a dissolved civil partnership, and a dependent relative (i.e. widowed parent or a parent who is a surviving civil partner or elderly relative) for whom you are claiming a dependent relative tax credit.

Tax relief is only available up to the maximum allowance.

Mortgage Interest Relief Rates/Ceilings

Switching lender or mortgage type to achieve a better interest rate is not the same as taking out a new loan. However, a new mortgage where you move home and take out a mortgage with a new or existing lender is eligible for relief.

A mortgage taken out from 1st January 2004 to 31st December 2012, used to purchase, repair, develop or improve your sole or main residence, situated in the State eligible for mortgage interest relief until 31st December 2017 (see rates/ceilings chart). Mortgages taken out after 31st December 2012 will not qualify for mortgage interest relief.

Mortgages taken out after 31st December 2012 will not qualify for mortgage interest relief.

Mortgages taken out prior to 1st January 2004 are no longer eligible for mortgage interest relief. However, top up loans/equity release loans taken out since 1st January 2004 on these pre-2004 loans may be eligible for mortgage interest relief, provided they are used to purchase, repair, develop or improve your sole or main residence, situated in the State.

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What changes arose from the Budget Announcement on 6th December 2011 [Budget 2012]

From 1st January 2012 the rate of mortgage interest relief for first time buyers who took out their first mortgage between the years 2004 to 2008 and are residing in the property increased to 30% until 2017. If you took out a loan outside of these dates the existing rules remain unchanged. (see rates/ceilings chart)

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If I took out my first mortgage between the years 2004 to 2008 what do I need to do?

There is no need for you to do anything. Revenue and the lending institutions have made or are making the necessary changes. For administrative reasons this will take a period of time to complete and will be different for different lenders. However, irrespective of the lender with whom you have your mortgage, you will not lose out and you will get the full mortgage relief due to you in 2012.

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What is my position if I took out a loan after 2008?

The situation is unchanged and the existing rules apply (see rates/ceilings chart). You are not entitled to any increase in mortgage interest relief arising from the Budget 2012 changes in mortgage interest relief.

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What is a year of assessment for mortgage interest relief?

Mortgage interest relief is calculated by reference to a year of assessment. This is also known as a tax year. It is the same as the calendar year, i.e. runs from 1st January to 31st December and not for any 12 month period [e.g. 1st April to 31st March].

By way of a practical example of how this works, where John takes out a loan on his main residence in June 2008, the first year of assessment is January to December 2008. John has an entitlement to mortgage interest relief for the period June to December 2008 [on the basis of the interest paid by him on the loan from June to December]. From January 2009 John was in his second year of entitlement to mortgage interest relief.

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How do I claim mortgage interest relief?

Mortgage interest relief must be claimed online.

A married couple or couple in a civil partnership may submit their details online on the same application. In all other cases of joint borrowings, each claimant should submit their details online separately. If you cannot use the online facility, please contact the TRS Helpline on 1890 46 36 26 or email trsadmin@revenue.ie for assistance.

Apply Online

When should I apply for mortgage interest relief?

You should apply online as soon as you have commenced repayments on your loan. In addition, if there is a material change to your loan [for example if you take out a top up mortgage on your home] you need to advise Revenue using the on-line system.

Apply Online

How long before I get my mortgage interest relief?

It can take a period of up to 8 weeks for mortgage interest relief to be applied to your mortgage by your lender, as your mortgage details have to be processed by Revenue and advised to your lender in advance. Please note that it may take longer to apply the mortgage interest relief if you have switched or consolidated loans. (Where you apply during the year in which you take out the loan, your lender will pay any arrears due to you in that year.) Apply Online

Do I need to apply for mortgage interest relief every year?

No. If your mortgage remains the same, your lender will continue to apply the relief automatically each year. However, if you take out a Top Up mortgage on your existing property you will need to inform Revenue. Also, if you move home and take out a new mortgage on your new property, you will need to inform Revenue.

Where there is a change to your mortgage and you are uncertain as to your continued eligibility there is an onus on you to notify Revenue of the change. Failure to do so will result in you having to repay any relief to which you were not entitled and where failure to notify has been done knowingly it will constitute a prosecutable offence.

How do I claim for previous years?

Claims for previous years (up to the last 4 years) must be applied for online.

Apply Online

How do I re-apply for mortgage interest relief if the relief was ceased because I made no mortgage payments but now have re-commenced payments?

An account will re-qualify for mortgage interest relief once three consecutive mortgage payments have been made. You must then complete a new online application.

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What type of loan does NOT qualify for mortgage interest relief?

Mortgage interest on a loan taken out for investment, rental, secondary or any properties other than your main residence does not qualify for interest relief. Mortgage relief for rental properties as part of your business is available through the tax system and you should contact your local Tax Office.

Mortgages taken out prior to 1st January 2004 are no longer eligible for mortgage interest relief.

I own two properties which I split my time between for work commitments. Can I claim mortgage interest relief on both?

No. In this case, you should nominate which property is your principal private residence and claim relief  on that mortgage.

Can I claim mortgage interest relief  on an Investment property?

No. Mortgage interest relief only applies to a loan in respect of your main residence. If the property you have is an investment property and you are receiving mortgage interest relief you should advise Revenue immediately using a pdfTRS 4 form (PDF, 54KB) or by contacting the Revenue TRS Helpline 1890 46 36 26.

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Can I claim mortgage interest relief if I move out of my main residence and rent it out?

No. As the house would no longer be your principal private residence, you would not be entitled to mortgage relief.

What are the implications for my mortgage relief if part of my mortgage is used to finance non-house expenditure i.e. holiday, car, education etc?

The full interest incurred by you is not eligible for relief in this instance. You must calculate the proportion of the mortgage that is applicable to your home, and insert this percentage on the space provided on the on-line system.

For example, assume you borrowed €200,000, and €30,000 is being used for non-house purposes, the percentage of your loan that qualifies for TRS can be calculated as follows:

Total amount borrowed = €200,000
Amount used on main residence = €170,000
Percentage of loan eligible for TRS = €170,000 divided by €200,000 x 100 = 85%

You must insert 85% in the 'percentage used on mortgaged property' space on the online application. TRS is only payable on the qualifying 85%.

Living or Working in the United Kingdom

Am I eligible for mortgage interest relief if I live and/or work in the U.K.?

If you are living in the State and paying a mortgage to a qualifying lender in the State but working in Northern Ireland, you can claim mortgage interest relief in this country, provided you have a PPS number. If you do not have a PPS number, you must apply for one from the Department of Social Protection.

Other loans, such as loans in UK currency, are not eligible for relief through the Tax Relief at Source Scheme but may be eligible for relief from your Local Tax Office.
You should contact your Local Tax Office for further information.

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What are the implications for mortgage interest relief purposes for a person purchasing their first home where a parent acts as a co-mortgagor/guarantor?

Where the parent is not living in the mortgaged property or making any repayments on the mortgage the person’s eligibility for Mortgage Interest Relief at the rate applicable to the first-time buyer is not affected by the fact that a parent is also party to the Mortgage Deed.

A "First-time Buyer" is not affected by the involvement of a person who is not a first time buyer on the mortgage deed providing that they are not contributing to the repayments of the mortgage. Where a parent is paying a portion of the mortgage then the amount of interest relief to which the first time buyer is entitled is affected. For further information you should contact the TRS Helpline on 1890 46 36 26 or email trsadmin@revenue.ie

What is the position if I take out a loan in 2013 or later?

Home Loans taken out in 2013 or later do not qualify for mortgage interest relief. Tax relief is available in respect of interest paid on a qualifying loan, taken out on or after 1 January 2004 and on or before 31 December 2012, which was used to purchase, repair or improve a qualifying residence.  Taken out prior to 31 December 2012 means that the loan has been drawn down and used by you on the qualifying residence (e.g. purchase of site plus building costs) before that date.

What is the position with loan stage payments which were used to purchase a site and build a home where a stage payment was received in 2012, and further stage payments have or will be provided again in 2013?

Where a loan was taken out and used by an individual to purchase a site between 1 January 2012 and 31 December 2012 any stage payments taken out in 2013 for the construction of a principal private residence on that site will qualify for relief provided any necessary planning permission was granted prior to 31 December 2012 and still remains in place.

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What is the position with loan stage payments which were used to renovate a home in 2012 and where further stage payments have or will be provided again in 2013 to complete the renovation?

If loan approval for the total amount of the loan was granted in 2012 and any necessary planning permission was granted prior to 31 December 2012 and still remains in place and provided some of the loan was used in 2012, then the stages drawn down and used in 2013 for the repair development or improvement (but not construction or purchase) of a principal private residence will qualify for relief.

For further information you should contact the TRS Helpline on 1890 46 36 26 or email trsadmin@revenue.ie

Are there changes being made as to how mortgage interest relief at source (TRS) is granted in 2014?

Yes. From January 2014 Lenders must grant TRS based on the amount of interest actually paid by the borrower within a tax year.

Why is this change necessary?

This is to comply with the legislation introduced in 2002. Section 244 of the Taxes Consolidation Act 1997 provides for the granting of tax relief based on the amount of qualifying interest paid by a borrower in any tax year. In practice many Lenders calculated TRS based on the amount of interest charged to a mortgage account irrespective of whether the interest was paid by the borrower or not. From January 2014 this arrangement will be discontinued and Lenders must grant TRS based on the amount of interest actually paid by the borrower within a tax year.

How will this impact on borrowers making their full repayment each month?

Where customers are paying their mortgage, including the interest portion in full this change will have no impact.

Will Revenue be contacting every customer?

No this is a matter for each lending institution.

How is TRS currently calculated and applied?

Revenue provides a monthly electronic file to each Lender advising the ceiling, rate, and percentage qualifying details applicable to each mortgage account. The Lender applies this information to the interest charged to each mortgage account in order to calculate the monthly TRS credit due.

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What is changing?

With effect from January 2014, Revenue has instructed all Lenders to only pay TRS on the actual interest paid to a mortgage account.

How will this impact on borrowers paying full interest but no capital each month?

Where a borrower pays the interest portion in full this change will have no impact.

How will this impact on borrowers who make partial payment each month?

Where borrowers only make a partial payment the amount of TRS granted will be reduced to reflect the actual amount of interest paid.

How will this change impact on borrowers that miss occasional payments? For example will they have to reapply for TRS each time that payments recommence?

Where a borrower is eligible for TRS the account ‘re-qualifies’ for mortgage interest relief once payments have resumed. However, depending on how the Lender has implemented the change to interest paid, the borrower may not immediately receive the TRS credit on resumption of the mortgage payment. While there may be a delay, the borrower will receive the TRS based on the amount of interest paid subject to applicable ceilings and rates.

October 2013

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