asked the Minister for Finance the number of persons who raised mortgage bank loans to pay off interest free tax arrears under the recent amnesty and who intend to claim mortgage interest against their future tax liability.
Written Answers. - Interest Free Tax Arrears.
43.
Mortgage interest tax relief is given under section 496 of the Income Tax Act, 1967, as amended, for interest paid on a loan which is used for qualifying purposes only. "Qualifying purposes" means the purchase, repair, development or improvement of the sole or main residence of: (a) the claimant, (b) a former or separated spouse of the claimant, (c) a relative of the claimant (or a relative of the spouse of the claimant) in respect of whom the claimant is in receipt of an income tax dependant relative allowance and the residence, if provided by the claimant, is provided free of rent or other consideration.
A loan which is used solely to pay off another qualifying loan may also be regarded as a qualifying loan. Accordingly, the interest on any loan used to pay off tax arrears under the recent amnesty would not qualify for tax relief under section 496 of the Income Tax Act, 1967.