Mortgage interest relief
Information
Mortgage interest relief is a tax relief based on the amount of mortgage interest that you pay in a given tax year for your principal private residence (your home).
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.
Normally, you do not claim mortgage interest relief in an annual tax return because it is given directly to you by your mortgage lender. Tax relief can still be claimed from your tax office for interest paid on non-secured loans used for qualifying purposes.
Mortgage interest relief will be abolished entirely after 31 December 2017.
Changes in Budget 2012
Budget 2012, which was announced in December 2011, changes the rules on mortgage interest relief as follows:
- First-time buyers in 2012 will get mortgage interest relief at a rate of 25% for the first 2 years, reducing after that
- Non-first-time buyers in 2012 will get mortgage interest relief at a rate of 15% from 2012 until 2017
- A special rate of 30% for the tax years 2012 to 2017 is introduced for first-time buyers who took out mortgages in the years 2004 to 2008
The Revenue Commissioners have published Tax Relief at Source - Mortgage Interest Paid (pdf) containing detailed FAQs on these Budget changes, including a range of scenarios.
The Department of Finance has published a Note on Mortgage Interest Relief Budget 2012 (pdf).
Rules
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, situated in Ireland. 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 will need to have a Personal Public Service Number (PPSN) in order to claim the relief.
However, you cannot claim mortgage interest relief if your sole or main residence is in the UK (including Northern Ireland) and you work and pay taxes in Ireland.
Relief is also subject to upper limits, which will depend on your personal situation and whether you are a first-time buyer - see 'Rates' for details.
Mortgage start date and entitlement to relief
Your entitlement to mortgage interest relief begins in the first year in which you make a payment of qualifying interest, as follows:
- If you started paying the mortgage in 2003 or earlier, your entitlement expired in 2009.
- For a mortgage taken out between 1 January 2004 and 31 December 2012, your entitlement to relief will continue until the end of 2017.
- If you are a first-time buyer who started paying the mortgage between 1 January 2004 and 31 December 2008, Budget 2012 provides for a special rate of mortgage interest relief of 30% for the tax years 2012 to 2017.
- If you start paying a mortgage between 1 January 2012 and 31 December 2012, Budget 2012 provides for the 2011 rates of mortgage interest relief to apply – it had been previously proposed to reduce them in 2012.
- No mortgage interest relief will be allowed for mortgages taken out after 31 December 2012.
Rates
Rates of mortgage interest relief
There are different rates for first-time buyers and for people who are not first-time buyers. Also, the rates of relief for first-time buyers (but not for other buyers) are reduced over the lifetime of the mortgage.
The Revenue Commissioners have published detailed tables showing the rates and ceilings that apply in various circumstances. These tables should be read in conjunction with Revenue’s Budget Summary Leaflet for Budget 2012.
First-time buyers
You are a first-time buyer for the purposes of mortgage interest relief if you are in the first 7 tax years of receiving the relief. For example, if you first received tax relief on a mortgage in 2006 or since then, you will still be a first-time buyer in 2012.
(In the 8th year of your mortgage the lower rate of 15% will apply to you and the ceiling will reduce to €3,000, as you will no longer be a first-time buyer.)
For 2011 and 2012, mortgage interest relief for first-time buyers is 25% for the first and second tax year in which you pay mortgage interest. You will get relief of 22.5% in tax years 3, 4 and 5. After that you will get relief of 20% but 2017 is the last year in which mortgage interest relief will be available.
For a mortgage taken out between 1 January 2004 and 31 December 2008, Budget 2012 provides for a special rate of mortgage interest relief of 30% for the tax years 2012 to 2017.
The amount of interest on which you can get relief is subject to upper limits, depending on whether you are single; married; widowed; in a civil partnership; or a surviving civil partner.
The following are the ceiling amounts allowable for first-time buyers for tax years 2011 and 2012:
| Single | Widowed/Surviving civil partner/Married/in a civil partnership | |
| First-time buyer | €10,000 | €20,000 |
To calculate what this is worth to you each year, get the correct percentage of the ceiling amount that applies to you.
For example, married first-time buyers on the second tax year of their mortgage get relief at 25% of €20,000. Therefore, the maximum amount by which their yearly mortgage interest can be reduced is €5,000.
Non-first-time buyers
The rate of mortgage interest relief is 15% if you are not a first-time buyer. The relief is subject to upper limits, depending on your personal situation.
The following are the ceiling amounts allowable for non-first-time buyers for tax years 2011 and 2012:
| Single | Widowed/Surviving civil partner/Married/in a civil partnership | |
| Non-first-time buyer | €3,000 | €6,000 |
To calculate what this is worth to you each year, get 15% of the ceiling amount that applies to you.
For example, married non-first-time buyers on the second tax year of their
mortgage get relief at 15% of €6,000. Therefore, the maximum amount their
yearly mortgage interest can be reduced by is €900.
How to apply
You should register online for mortgage interest relief after you have paid the first instalment of your mortgage.
If you cannot use the online facility, you can contact the TRS Helpline on
1890 46 36 26 or email trsadmin@revenue.ie for assistance.
Where to apply
Revenue will provide you with more information about Tax Relief at Source (TRS) for Mortgage Interest Relief.
TRS Section
Collector-General's Division
Sarsfield House
Francis Street
Limerick
Ireland
Locall:1890 463626
Homepage: http://www.revenue.ie
Email: trsadmin@revenue.ie
Language
Related Documents
- Stamp duty on property
Stamp duty is payable on the transfer of property. - Paying for a home in Ireland
Loans for buying a home in Ireland are available from building societies, banks, and local authorities. There are different kinds of mortgages, and tax relief is available on interest payments. - Budget 2012
Budget 2012 was announced on 5 and 6 December 2011. Summary of the main changes.
Contact Us
If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000 (Monday to Friday, 9am to 9pm) or you can visit your local Citizens Information Centre.