Mortgage interest relief
Mortgage interest relief is a tax relief based on the amount of qualifying mortgage interest that you pay in a given tax year for your principal private residence (your home). A tax year means the period from 1 January to 31 December.
Mortgages taken out after 31 December 2012 do not qualify for mortgage interest relief.
Changes in 2018
Mortgage interest relief was due to be abolished entirely after 31 December 2017. Following Budget 2018, it has been extended to 2020 on a tapered basis for people who were eligible in 2017 (in general, people who took out a qualifying mortgage loan between 2004 and 2012). It will cease entirely from January 2021.
For you to qualify for tax relief on mortgage interest repayments, the interest must relate to money that you have borrowed to purchase, repair or improve your sole or main residence. For example, you cannot claim mortgage interest relief for interest on a loan used to buy a holiday home or investment property, but you can claim it if the loan is to extend or improve your main home.
If you work and pay taxes in the UK (including Northern Ireland) but your sole or main residence is in the State, you can claim relief on the interest you pay on the mortgage. You need to have a Personal Public Service Number (PPSN) to claim the relief.
Relief is also subject to upper limits or thresholds, which depend on your personal situation and whether you are a first-time buyer - see Rates and thresholds for details.
Mortgage start date and entitlement to relief
Your entitlement to mortgage interest relief depends on the start date of your mortgage:
- If you took out a mortgage in 2003 or earlier, your entitlement expired in 2009.
- If you took out a mortgage between 1 January 2004 and 31 December 2012, your entitlement to relief was due to end on 31 December 2017. Following Budget 2018, it will continue on a tapered basis until the end of 2020.
- If you took out a mortgage after 31 December 2012, you are not entitled to mortgage interest relief.
If you married or entered into a civil partnership with someone who is entitled to mortgage interest relief for a loan taken out between 2004 and 2012, you may be entitled to additional relief for that loan from the date of your marriage or civil partnership.
How the relief works
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. The lender does this by reducing your mortgage repayment by the amount of tax relief you are entitled to in each tax year. Any amendments to this tax relief - for example, if there is a change in interest rates - are made automatically by your lender.
You do not have to be earning a taxable income to qualify for mortgage interest relief.
Normally, you do not claim mortgage interest relief in an annual tax return because it is given directly to you by your mortgage lender. However, you can still claim tax relief from your Revenue office for interest paid on non-secured loans used for qualifying purposes.
Mortgage arrears and payment of interest
While the legislation governing mortgage interest relief provides for granting of relief based on the amount of qualifying interest paid in a tax year, many lenders used to operate the relief based on the amount of interest charged to an account, even if the borrower did not actually pay that amount of interest. In the past, this had little impact.
However, in response to the growing incidence of mortgage arrears, since January 2014 all lenders must grant Tax Relief at Source (TRS) based on the amount of interest actually paid by the borrower within a tax year.
This change does not affect borrowers who make the full repayments on time, in accordance with their mortgage loan agreement.
For borrowers who do not make their repayments or who pay less than the amount of interest charged to their account, the TRS amount is reduced to reflect the actual amount of interest paid.
People who are only paying the interest portion of their mortgage (under an interest-only arrangement) are still entitled to TRS and will continue to get it if they meet the qualifying conditions.
Rates and thresholds
There are different rates and thresholds for mortgage interest relief, depending on your circumstances.
- The rate of relief depends on when you took out your mortgage and whether you were a first-time buyer.
- The amount of mortgage interest on which you can get relief is subject to upper limits or thresholds. The threshold that applies to you depends on your situation.
Revenue has published details of how to calculate the mortgage interest relief you will get each year.
You are considered a first-time buyer for the purposes of mortgage interest relief for the first 7 tax years that you are entitled to the relief. In 2018 the majority of people who still qualify as first-time buyers are those who took out their mortgage in 2012 and are now in year 7. Their rate of mortgage interest relief in 2018 is 20%.
However, for mortgages taken out by first-time buyers between 1 January 2004 and 31 December 2008, there was a special rate of 30% for the tax years 2012 to 2017. In most cases, these people are no longer classed as first-time buyers, as over seven years have passed since they took out their mortgages. So, the thresholds for non-first-time buyers apply to them – see below.
If you are not a first-time buyer, the rate of mortgage interest relief is 15% (unless you took out the mortgage as a first-time buyer between 1 January 2004 and 31 December 2008 - in this case you continue to get the special rate of 30%).
Lower thresholds apply to non-first-time buyers – see below.
Tapered reduction in qualifying interest
The percentage of interest qualifying for the relief reduces in 2018 and following years, as set out in this table:
|2017||2018||2019||2020||2021 and after|
The amount of mortgage interest on which you can get relief is subject to upper limits or thresholds. The threshold that applies to you depends on your situation.
The following were the threshold amounts for tax year 2017:
|Single||Married/in a civil partnership/widowed/surviving civil partner|
|First-time buyer (bought in years 2011 or 2012, so in year 6 or 7 of the mortgage in 2017)||€10,000||€20,000|
The following are the threshold amounts for 2018, reduced by 75% from 2017 amounts in each case:
|Single||Married/in a civil partnership/widowed/surviving civil partner|
|First-time buyer (bought in 2012, so in year 7 of the mortgage in 2018)*||€7,500||€15,000|
*If you took out a mortgage in 2011 as a first-time buyer, the higher threshold (€10,000 or €20,000) applied to you in 2017, as you were in year 7 of the mortgage. However, you are no longer a first-time buyer in 2018, as you are now in year 8. The threshold that applies in 2018 will therefore be €2,250 or €4,500, which is 75% of the relevant 2017 threshold for non-first-time buyers.
How to apply
In general, you should register
online for mortgage interest relief. However, if you cannot use the online
facility, you can contact the TRS Helpline on 1890 46 36 26 or email email@example.com for assistance. There
information on revenue.ie.