I propose to take Questions Nos. 297 and 304 together.
The position is that mortgage interest relief is available in respect of interest paid on qualifying loans taken out on or after 1 January 2004 and on or before 31 December 2012 and such relief applies up to and including the tax year 2017.
Mortgage interest relief is available, at varying rates and subject to certain ceilings, in respect of interest paid by an individual on a loan used by that individual for the purchase, repair, development or improvement of his/her sole or main residence.
However, it should be noted that where an individual or family rents out their residential property they may be allowed a deduction, subject to certain conditions, in computing the taxable rents from that letting of 75% of the interest on monies borrowed to purchase, improve or repair that property.
As you are aware, this Government is very conscious of the significant concerns and difficulties faced by homeowners, not least in relation to their mortgages. In addition, the Government is committed to helping address the particular problems faced by those that bought homes at the height of the property boom between 2004 and 2008. In this regard, in Budget 2012, I announced my intention to fulfill the commitment in the Programme for Government to increase the rate of mortgage interest relief to 30 per cent for first time buyers who took out their first mortgage in that period.
A mortgage holder will qualify for the increased rate if they made their first mortgage interest payment in the period 2004 to 2008 or if they drew down their mortgage in that period.
As you will appreciate, I receive numerous requests for the introduction of new tax reliefs and the extension of existing ones, but I must be mindful of the public finances and the many demands on the Exchequer, given the significant budgetary constraints. Tax reliefs, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system that much more difficult.
Furthermore, it is also worth pointing out that this Government has put in place a comprehensive strategy to address the significant difficulties faced by some home owners in meeting their mortgage obligations. The Government's strategy is built around four distinct areas – Personal Insolvency, a Mortgage Advisory Service, the Mortgage to Rent Scheme and Engagement with the banks, significant progress has been made in these areas.
As announced recently, the implementation of this strategy has further intensified with the Central Bank now setting time bound and measurable targets for banks on their progress in resolving, on a durable basis, the position of their mortgage customers who are in arrears on their mortgage. The "Keane Report" has already outlined a number of possible options that can be considered in order to provide a sustainable solution for a mortgage in difficulty on a case by case basis.
The Government recognises that the position of negative equity is a difficult one for some homeowners. However, a number of steps have been taken to assist those that find themselves in this position. For example, the Central Bank is allowing banks, in appropriate cases, to provide new mortgages to people to move home even if the homeowner is currently experiencing negative equity.
However, in the mortgage area, the main priority for Government relates to the issue of significant mortgage arrears and the objective is, from both a social and economic policy point of view, that home owners who are in mortgage difficulty should be assisted to remain in their homes where feasible and appropriate.
The importance of the work to address the mortgage arrears problem is reflected in the fact that a special Government committee on this issue has been established, which is chaired by the Taoiseach. However, ultimately the Government is of the view that it is the regeneration of the economy, the restoration of employment levels and income growth that will address the real social and economic problems associated with high levels of mortgage and personal indebtedness. As the Deputy will be aware, the Government focus has been on the introduction of many new initiatives aimed at fostering and generating economic growth. The successful achievement of this objective will restore consumer confidence and bring the tangible and sustainable recovery that the country requires.
