Dáil Éireann Debate, Tuesday - 25 March 2025
281. Deputy Willie O'Dea asked the Minister for Finance to consider the introduction of a mortgage interest relief scheme, similar to what was available to individuals who drew down mortgages from 2008 to 2012; and if he will make a statement on the matter. [13477/25]
View answerThe mortgage interest relief for principal private residences which was available in respect of qualifying home loans taken out between 1 January 2004 and 31 December 2012 was phased out on a gradual basis over the period 2009 to 2020. The decision to abolish it was taken in the wake of the financial crisis, with the cost of the relief being one of the influencing factors. The relief cost approximately €280 million in 2005, rising to more than €700 million in 2008. Prior to its curtailment and eventual abolition, the top two income deciles in 2005 accounted for close to half of the tax forgone through the tax relief. This issue was highlighted in the findings of the 2009 Commission on Taxation report.
Eligible taxpayers can currently avail of Mortgage Interest Tax Relief (MITR). The relief initially applied in respect of the 2023 year of assessment but was subsequently extended for one further year in Budget 2025 to the 2024 year of assessment. MITR is available to taxpayers in respect of their principal private residence in the State where the outstanding mortgage balance was between €80,000 and €500,000 on 31 December 2022. The relief extends to a qualifying property located in the State which is the sole or main residence of the individual’s former or separated spouse or civil partner or a dependent relative. Furthermore, the taxpayer must be compliant with Local Property Tax requirements.
The relief is available at the standard 20 per cent rate of income tax in respect of increases in interest paid. For 2023, the relief will apply to the increase in interest paid in 2023 over interest paid in 2022. For 2024, the relief will apply to the increase in interest paid in 2024 over interest paid in 2022.
For each year of assessment, the value of the relief will be equal to the lesser of 20 per cent of the increase in interest paid or €1,250, applying on a per property basis. Thus, the maximum relief available is €1,250 per property.
To claim MITR, the taxpayer must file a tax return with Revenue. The relief operates by way of a credit offset against the taxpayer’s income tax liability in 2023 or 2024.
I encourage all those who are eligible for this relief to make a claim.
MITR was announced in Budget 2024 in light of the exceptional interest rate environment at the time, following successive increases in the interest rates of the European Central Bank (ECB) and the resulting impact on mortgage costs. MITR was introduced alongside a suite of other measures aiming to help offset the most severe impacts of inflation, focusing on protecting the most vulnerable in particular and with the policy response designed to avoid generating second round effects that could lead to an inflationary spiral. As mortgage rates have stabilised and in light of the successive cuts in ECB interest rates since June 2024, I have no current plans to introduce a new mortgage interest relief.
