Getting tax relief for Credit Union Loans

Tax Relief on Home Improvement Loans

Did you know you can claim tax relief on the interest paid on a loan used by you to purchase, improve, repair or develop your main residence or to pay off another loan used for that purpose?  We have previously discussed Mortgage Interest relief but not many people know that you can also get tax relief on your home improvement loan (e.g. a Credit Union loan for home improvements).
The only home improvement that you cannot claim tax relief for is if the loan is used for furniture or removable fittings. For a full list of examples of what the loan can be used for, visit Revenue.

What tax relief will I get?

You get tax relief for interest payments made on your home improvement loans. This tax relief is payable at the standard rate of income tax (20%) and is subject to overall limits.  However if you are already receiving the maximum relief for your mortgage interest, then there will be no additional relief due for your home improvement loan.
You can claim your tax relief for your home improvement loan at the end of the tax year. The tax relief is not granted at source unlike Mortgage Interest relief, where your lender reduces your mortgage repayment by the tax credit due. Instead you receive a tax credit for this relief so you actually have to pay tax to get the benefit of it.

Thanks to Jennifer who led this weeks Wednesday Club