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.
Mortgage interest relief was due to be abolished entirely after 31 December 2017. It will now be retained beyond this date, on a tapered basis. Details are to be announced in Budget 2018.
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 will need to have a Personal Public Service Number (PPSN) in order to claim the relief.
Relief is also subject to upper limits, which will depend on your personal situation and whether you are a first-time buyer - see Rates and ceilings for details.
Mortgage start date and entitlement to relief
Your entitlement to mortgage interest relief depends on the relevant start date, 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.
- Mortgages taken out after 31 December 2012 do not qualify for mortgage interest relief.
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. Tax relief can still be claimed 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 are obliged to grant Tax Relief at Source (TRS) based on the amount of interest actually paid by the borrower within a tax year, in accordance with the legislation.
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 due is reduced to reflect the actual amount of interest paid.
As regards interest-only arrangements, people who are only paying the interest portion of their mortgage are still entitled to TRS and will continue to get it if they meet the qualifying conditions.
Read more in Revenue's Frequently Asked Questions.
Rates and ceilings
There are different rates and ceilings for mortgage interest relief, depending on your circumstances. Revenue has published detailed tables, which show how the various rates and ceilings are applied. You can use these tables to calculate how much mortgage interest relief you will get each year.
You are a first-time buyer for the purposes of mortgage interest relief if you are in the first 7 tax years of receiving it. Rates of relief for first-time buyers are generally reduced over the lifetime of the mortgage. However, for mortgages taken out by first-time buyers between 1 January 2004 and 31 December 2008, there is a special rate of 30% for the tax years 2012 to 2017.
Rates for non-first-time buyers
If you are not a first-time buyer, the rate of mortgage interest relief is 15%.
The amount of mortgage interest on which you can get relief is subject to upper limits or ceilings. The ceiling that applies to you depends on your situation.
The following are the ceiling amounts for tax year 2016:
|Single||Married/in a civil partnership/widowed/surviving civil partner|
|First-time buyer (bought in years 2004 to 2009)||€3,000||€6,000|
|First-time buyer (bought in years 2010 to 2012)||€10,000||€20,000|
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 about TRS on the Revenue website.