First-time buyers running out of time to avail of mortgage interest relief

First-time buyers running out of time to avail of mortgage interest relief First-time buyers running out of time to avail of mortgage interest relief

Prospective first-time buyers have between now and the end of the year to purchase a new home or risk losing out up to €200 per month in tax relief.

The Mortgage Interest Relief scheme, which provides significant savings for homeowners, will change dramatically on December 31st 2011.

While some discounts will be available in 2012, the Finance Act 2010 provides for lower rates of relief and lower ceilings on the amounts of qualifying interest, with the scheme ending for new first time buyers altogether in December 2012.

Under the current rules a first time buyer couple taking out a mortgage for €200,000, on a 5% interest rate, will qualify for Mortgage Interest Relief of €208 on their monthly mortgage payments.


That’s a substantial incentive for first time buyers to purchase a home before the end of this year as even if the market recedes further next year, it is unlikely that the savings would top what a person would receive from the mortgage interest relief.

At present the rate of mortgage interest relief applicable to first-time buyers is 25% in years one and two, 22.5% in years three, four and five and 20% for years six and seven of the mortgage on a maximum interest paid of €10,000 per annum.

Mortgages taken out up to December 31st 2011, subject to qualifying loan criteria, are eligible for TRS Mortgage interest relief until December 2017.

Mortgages taken out from 1st January 2012 to 31st December 2012 will be entitled to mortgage interest relief at the reduced rates of 15% for first time buyers and 10% for non first time buyers, on the first €3,000 interest paid per individual.

Mortgages taken out after 31st December 2012 will not qualify for mortgage interest relief.


Mortgage interest relief is administered via Tax Relief at Source (TRS). This means that your mortgage lender gives you the benefit of tax relief on the amount of mortgage interest paid. They do this by reducing your mortgage repayment by the amount of tax relief you are entitled to in each tax year. Your mortgage lender then claims this tax relief from the Revenue Commissioners. Any amendments in this tax relief - for example, if there is a change in interest rates - are made automatically by your lender on behalf of the Revenue Commissioners.

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