Dáil Éireann Debate, Tuesday - 17 May 2016
181. Deputy Gino Kenny asked the Minister for Finance the arrangements for taxpayers receiving tax relief at source on mortgage interest payments from 2017 onwards; and if he will make a statement on the matter. [9477/16]
Amharc ar fhreagra209. Deputy Aengus Ó Snodaigh asked the Minister for Finance if he will extend the tax relief at source for mortgage interest paid on a home loan, given that many home owners who are eligible under this scheme will struggle to pay their mortgage when the scheme finishes in 2017. [10255/16]
Amharc ar fhreagraI propose to take Questions Nos. 181 and 209 together.
Section 244 of the Taxes Consolidation Act 1997 provides for tax relief in respect of interest paid on qualifying home loans taken out on or after 1 January 2004 and on or before 31 December 2012, with relief being available until 31 December 2017. The mechanism by which relief is given is set out in Section 244A of the Act, which provides for the granting of relief at source by the mortgage provider. The Deputies will be aware that mortgage interest relief has been abolished for homes purchased since 1 January 2013.
On foot of a change I introduced in Budget 2012, first time buyers who bought at the height of the property boom between 2004 and 2008 receive a rate of mortgage interest relief of 30%. This 30% rate will continue to be applicable to these first-time buyers for the remaining years that mortgage interest relief is scheduled to be available, i.e. currently up to the end of 2017. In the absence of this change the mortgage interest relief available would have gradually reduced to a rate of 15%.
Single individuals and married couples/civil partners that are first-time buyers qualify for mortgage interest relief for the first seven years of their mortgage up to a maximum ceiling of €10,000 and €20,000 respectively. Thereafter relief is restricted to ceilings of €3,000 and €6,000 respectively.
The system of mortgage interest relief is designed and targeted in such a way that the relief is of greater value in the early years of a qualifying loan where the interest represents a greater proportion of the repayment. Mortgage interest relief is of lesser value to individuals whose repayments are made up of a higher proportion of principal than interest, as would generally be the case for those who move in to the eighth and subsequent years of their loans. It is worth noting that the application of the ceilings already work to reduce the relief available in a gradual manner. In addition, as the amount of interest payable reduces as a mortgage is paid down, the level of mortgage interest relief also reduces in tandem.
The Deputies will be aware that, in the Programme for Partnership Government, there is a commitment to retain mortgage interest relief beyond the current end date of December 2017 on a tapered basis. Deputies will also note that the current scheduled end date for mortgage interest relief is December 2017 and options for the tapering envisaged in the programme for government will be considered in due course.
