Mortgage interest relief
Information
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).
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. Any amendments to this tax relief - for example, if there is a change in interest rates - are made automatically by your lender.
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 interest relief will be abolished entirely after 31 December 2017.
Changes in 2012
The Finance Bill 2012 includes the following changes to the rules on mortgage interest relief:
- First-time buyers in 2012 will get mortgage interest relief at a rate of 25% for the first 2 tax years, reducing after that, with the appropriate first-time buyer ceilings (see ‘Rates and ceilings’ below)
- 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 being introduced for first-time buyers who bought their sole or main residence for the first time in the years 2004 to 2008 or paid their first mortgage interest payment in this period
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.
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. 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 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 bought a sole or main residence between 1 January 2004 and 31 December 2008, or paid your first mortgage interest payment in this period, the Finance Bill provides for a special rate of mortgage interest relief of 30% for the tax years 2012 to 2017.
- If you start paying interest on a mortgage between 1 January 2012 and 31 December 2012, the Finance Bill 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 and ceilings
There are different rates and ceilings for first-time buyers and for people who are not first-time buyers. For first-time buyers only, rates of relief 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.
Rates for 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.
Mortgage interest relief for first-time buyers in 2012 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 example, if you were entitled to relief for the first time in 2009, you will still be a first-time buyer in 2015. However, in the 8th year of your entitlement to relief (2016 in this case) the lower rate of 15% will apply as you will no longer be a first-time buyer. The ceiling (see below) will reduce to €3,000/€6,000.
Special 30% rate
For mortgages taken out by first-time buyers between 1 January 2004 and 31 December 2008, the Finance Bill provides for a special rate of mortgage interest relief of 30% for the tax years 2012 to 2017.
Rates for non-first-time buyers
The rate of mortgage interest relief is 15% if you are not a first-time buyer.
Ceilings
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 whether you are single; married; widowed; in a civil partnership; or a surviving civil partner.
The following are the ceiling amounts for tax years 2011 and 2012:
| Single | Widowed/Surviving civil partner/Married/in a civil partnership | |
| First-time buyer | €10,000 | €20,000 |
| Non-first-time buyer | €3,000 | €6,000 |
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.
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. - Budget 2012
Budget 2012 was announced on 5 and 6 December 2011. Summary of the main changes. - Budget 2009
Budget 2009 was announced on 14 October 2008. 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.