Fine Gael TD for Galway West & Mayo South

PQ No. 86 – 22nd May ’13 – Mortgage Interest Relief

To ask the Minister for Finance if his attention has been drawn to the fact that the much-welcome benefits of the mortgage tax-relief at source for persons who first purchased homes between 2004 and 2008 as introduced in Budget 2012 are being negated by the continued existence of the stipulation which caps and reduces the tax relief at source after seven years and if he will strongly consider, owing to the difficult financial circumstances of mortgage-holder who purchased in the aforementioned years, extending the applicability of the full mortgage tax relief rate beyond seven years until 2017 when mortgage relief is schedule to end..

– Seán Kyne.

REPLY 

Minister for Finance ( Mr Noonan) :           The position is that tax relief is available, at varying rates and subject to certain ceilings, in respect of interest paid by an individual on a loan used for the purchase, repair, development or improvement of his/her sole or main residence.

The relief is available up to and including the tax year 2017 on the interest paid on qualifying home loans taken out in the period 2004 to 2012.

Where there is an entitlement to mortgage interest relief, it is available at varying rates and subject to certain ceilings.  For example, individuals who are in the first seven tax years of their qualifying loan are entitled to a higher interest ceiling, known as the ‘first-time buyer’ ceiling, on which the rate of relief is applied.  For such individuals, the interest ceilings are €10,000 per annum for a single individual and €20,000 per annum for married couples and civil partnerships. For individuals who have an entitlement to mortgage interest relief and who are in their eighth or subsequent years of their qualifying loan a lower interest ceiling applies, known as the ‘non-first-time buyer’ ceiling. For such individuals, the interest ceilings are €3,000 per annum for single and €6,000 per annum for married couples/civil partnerships. Therefore, some individuals will experience a reduction in the level of relief they receive as they enter into their eighth and subsequent years of their qualifying loans.  However, they will continue to receive mortgage interest relief up until the end of 2017.

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 moved in to the eighth and subsequent years of their loans.

As the Deputy is aware the Programme for Government contained a very specific commitment to examine a proposal to increase mortgage interest relief to 30% for first time buyers who bought between 2004 and 2008. In Budget 2012, this commitment was fulfilled. It is not my intention to widen the parameters of the commitment contained in the Programme for Government.

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.

The position is that tax relief is available, at varying rates and subject to certain ceilings, in respect of interest paid by an individual on a loan used for the purchase, repair, development or improvement of his/her sole or main residence.

The relief is available up to and including the tax year 2017 on the interest paid on qualifying home loans taken out in the period 2004 to 2012.

Where there is an entitlement to mortgage interest relief, it is available at varying rates and subject to certain ceilings.  For example, individuals who are in the first seven tax years of their qualifying loan are entitled to a higher interest ceiling, known as the ‘first-time buyer’ ceiling, on which the rate of relief is applied.  For such individuals, the interest ceilings are €10,000 per annum for a single individual and €20,000 per annum for married couples and civil partnerships. For individuals who have an entitlement to mortgage interest relief and who are in their eighth or subsequent years of their qualifying loan a lower interest ceiling applies, known as the ‘non-first-time buyer’ ceiling. For such individuals, the interest ceilings are €3,000 per annum for single and €6,000 per annum for married couples/civil partnerships. Therefore, some individuals will experience a reduction in the level of relief they receive as they enter into their eighth and subsequent years of their qualifying loans.  However, they will continue to receive mortgage interest relief up until the end of 2017.

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 moved in to the eighth and subsequent years of their loans.

As the Deputy is aware the Programme for Government contained a very specific commitment to examine a proposal to increase mortgage interest relief to 30% for first time buyers who bought between 2004 and 2008. In Budget 2012, this commitment was fulfilled. It is not my intention to widen the parameters of the commitment contained in the Programme for Government.

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.

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