Mortgage Interest Tax Credit

SUMMARY  

Grant / Support Name: Mortgage Interest Tax Credit   

Provider: Irish Government  

Value: Tax credit of up to €1,250 

Overview: The Finance Bill 2023 introduced a temporary one-year Mortgage Interest Tax Credit. This credit is for homeowners who have paid interest on a loan for their main home and is based on the increase in mortgage interest paid in 2023 compared to 2022.
To qualify, homeowners must have an outstanding mortgage balance between €80,000 and €500,000 as of December 31, 2022. The maximum relief at the standard tax rate of 20% is capped at €6,250 per property, resulting in a maximum tax credit of €1,250. This tax credit only applies to the year 2023

Eligibility:   You will be eligible for this Mortgage Interest Tax Credit if you had an outstanding loan balance on your principal private residence of between €80,000 and €500,000 in the years 2022 and 2023 and the interest increased from 2022 to 2023. 

You may also qualify if the loan is on the principal private residence of a dependent relative or the residence of a spouse which used to attend employment. 

Special Conditions:  

Your property will not qualify for the credit if it is a residential property not compliant with planning permissions or a residential property acquired from a connected party where the purchase price substantially exceeded the property value. 

Tax Implications: The property must be compliant with Local Property Tax (LPT) obligations 

ARTICLE 

The Mortgage Interest Tax Credit reduces your Income Tax obligation for the year 2023. To benefit from this credit, you must have an Income Tax liability to offset against. It does not apply to Universal Social Charge (USC) or Pay Related Social Insurance (PRSI). 

The relief is available if you had an outstanding mortgage balance on your principal private residence of between €80,000 and €500,000 at 31 December 2022 and paid more interest on that mortgage  in 2023 compared to 2022. 

If the credit amount exceeds your Income Tax liability, you won't benefit the full credit. However, you can receive a partial refund equal to your total Income Tax liability for the year. 

The maximum tax relief is set at 20% of qualifying interest payments, capped at €6,250 per property, which equals a maximum tax credit of €1,250.  

The amount you can claim depends on whether you own your home by yourself or with someone else. It will be less  if you paid interest for less than a full year in 2022 or 2023.  

Revenue systems will calculate the relief due to you when you have provided the relevant information but here are some examples to show how it works in different situations. 

Example 1 - single claimant 

On 31 December 2022, John had an outstanding mortgage balance of €200,000 on his own home and the  loan was in place for all of 2022 and 2023. In 2023, John paid €12,000 in interest on his qualifying loan which was €3,000 more than the €9,000 he paid in 2022.  

Mortgage Interest Tax Calculation 

2023 Interest paid (A) €12,000  

2022 Interest paid (B) €9,000  

A-B €3,000 

Mortgage Interest Tax Credit due at 20% €600 

Example 2 - more than one claimant 

Jack and Diane are a cohabiting couple with a qualifying loan for 2022 and 2023. Jack pays 80% of the interest and Diane pays the remaining 20%. In this case, the credit is divided among them based on the amount of interest each person paid. 

​​Mortgage Interest Tax Calculation 

2023 Interest paid (A) €10,000  

2022 Interest paid (B) €8,000  

A-B €2,000 

Mortgage Interest Tax Credit due at 20% €400 

This is divided pro rata between Jack and Diane based on the interest they paid as follows: 

Jack - 80% of €400 = €320 

Diane - 20% of €400 = €80 

Example 2 - interest paid for less than a full year 

If you paid interest for less than a full year in 2022 or 2023, the relief due will be prorated. This means that the maximum relievable interest of €6,250, and the maximum tax credit of €1,250, will be adjusted to reflect the shorter timeframe.   

Sarah has a qualifying home loan. Sarah had the loan for all of 2022 and paid it off on 30 June 2023. Sarah paid €6,000 interest in 2022 and €4,000 interest in 2023. 

As the timeframes are not the same, the interest paid in the longer period will be adjusted to match the shorter number of days. The adjusted figure is used to calculate the tax relief available. 

​​Mortgage Interest Tax Calculation 

2023 Interest paid (A) €4,000 (6 months) 

2022 Interest paid €6,000 (12 months) 

pro-rata adjusted 2022 interest amount €3,000 

A-B €1,000 

Mortgage Interest Tax Credit due at 20% €200 

How to claim  

If you are a PAYE taxpayer you can claim the credit for 2023 by completing your Income Tax Return in myAccount. If you are self assessed you can claim the credit for 2023 by completing your Income Tax Return in ROS.  

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