Mortgage Interest Relief – is my loan eligible?
Posted on | August 10, 2009 | 2 Comments
Following the emergency budget in April 2009, a number of changes were made to mortgage interest relief. These affected
- Who is eligible for mortgage interest relief
- How much relief you will get
We’re going to look at who is eligible for mortgage interest relief here. In later posts, we will look at how much relief you are due, including the important question: are you a first time buyer
Who is eligible?
Tax Relief is now only available for the 1st seven years interest paid on a qualifying loan on a property. ‘Qualifying loan’ is a Revenue term and for most of us this is the mortgage we took out to buy the property. But other qualifying loans are:
- Loans or mortgage increases for repairs and improvements to your home
- loans or mortgages of your former spouse or a dependent relative where you pay the mortgage.
There are some loans that are not considered as ‘qualifying loans’ such as:
- any loans or additions to the mortgage, where the money was not spend on your home. for example car loans or re-financing.
- Also, switching mortgage provider does not re-start the loan as a year one qualifying loan, it’s only if the new mortgage is for a new home.
Eligibility in action
Let’s have a look at some of the more common
Example 1:
John and Mary bought their home in 1990 and took out a mortgage payable over 25 years, with no changes since then. Following the changes in the budget, they are no longer eligible for mortgage interest relief as the mortgage has been running for more than 7 years.
Even if, in 2006, they moved the mortgage to a new lender, Revenue will look to see what the initial reason for the loan was and if they deem it to be more than 7 years old then it is no longer eligible.
Example 2:
Patrick and Jane bought their home in 1990 and took out a mortgage payable over 25 years. In 2006 they built an extension for €75,000 paying €25,000 in cash and increasing their mortgage by €50,000.
In this case, their initial mortgage no longer gets mortgage interest relief, but the interest payable on the top-up of €50,000 is eligible for mortgage interest relief for 7 years until 2013.
Example 3:
James bought a home in 1990 and took out a mortgage payable over 25 years. In 2005 he moved to a new home, taking out a new mortgage.
James will get mortgage interest relief on his new home for 7 years from 2005 to 2012.
Example 4:
Yvonne bought a home in 1990 and took out a mortgage payable over 25 years. In 2005 she increased her mortgage by €40,000 to buy the car of her dreams and to pay for a driving holiday.
Even though the mortgage top-up was within the last 4 years, this is not an eligible loan therefore no mortgage interest relief is available.
Further Information
So your loan is eligible. Next you need to check out if you are a first time buyer and then calculate how much relief you are due.
For personal tax advice, contact us at Red Oak Tax Refunds.
Tags: mortgage interest > mortgage interest relief > PAYE > tax > tax refund
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August 14th, 2009 @ 10:32 am
[...] have already looked at eligiblility in a previous post (Here). Once you have checked that you are eligible, the next step is to see if you are deemed as a first [...]
August 17th, 2009 @ 9:30 am
[...] Have I an eligible loan? [...]