Private Residence Mortgage & Loan Interest Tax Relief
This tax relief is only available in respect of your principal private residence. If you have more than one residence you must nominate one of them as your principal private residence for the purposes of mortgage interest tax relief. The relief is available in respect of interest on borrowings used for the purchase, improvement or repair of your property.
From 1st May 2009 the maximum allowable period for mortgage interest tax relief is 7 years. This applies to all private residence loans and mortgages in place on the 1st May 2009 and all future loans. Anybody who benefited from mortgage interest tax relief prior to 1st May 2002 are not entitled to relief after 1st May 2009. The relief will be abolished completely for the tax year 2018 and subsequent years.
No tax relief is allowed for mortgages taken out after the 31st December 2012.
The rules for the rate of relief on interest qualifying for tax relief changed in 2009, 2010, 2011 and again in 2012 and are summarised as follows;
First-time buyers – the rate of mortgage interest relief is increased from 20% to 25% in years 1 and 2 and to 22.5% in years 3, 4 and 5. The relief remains unchanged at 20% for years 6 and 7 of the mortgage. The maximum amount of interest paid qualifying for tax relief is €20,000 for married couples/ civil partnerships and widowed. For single people the limit is €10,000.
Non-first time buyers – the rate of mortgage relief is reduced from 20% to 15%. The maximum amount of interest paid qualifying for tax relief is €6,000 for married couples/ civil partnerships and widowed. For single people the limit is €3,000.
The tax relief is allowed at source by lending institutions. Once the necessary forms are completed, qualifying mortgage repayments are calculated after deducting the mortgage interest tax relief. If the tax relief has not been allowed by the lender during the tax year the relief due has to claimed directly from the Revenue.
If the lender is not allowing your mortgage interest tax relief you should contact the Revenue Commissioners at TRS Section, Collector-General’s Division at 01 7383663 who will arrange for the relief to be given to you. The Revenue will need details of your mortgage account number and the lender involved to check the position for you.
If you are moving house and have purchased a new private residence on bridging loan finance pending the sale of your first residence there is additional tax relief available on the bridging loan interest. This extra relief is allowed for a period of 12 months. The maximum interest qualifying for this special relief is the same as the amounts referred to above for normal mortgage interest tax relief.
Unsecured Home Loans
Relief for interest payments made on unsecured Home Loans e.g. short term personal bank or credit union loans used for qualifying purposes, i.e. repair or improvement of your sole or main residence, must be claimed through your local tax office.