Tax Relief
Since 1 January 2002, your home mortgage lender gives you the benefit of the tax relief element on your mortgage interest on behalf of the Revenue Commissioners (TRS).
Under TRS (Tax Relief at Source), either your mortgage repayment is reduced by the amount of the tax relief, or a credit will be lodged into your account where you make the mortgage payment from, by your lender. Your lender in turn claims this amount from the Revenue. Any further tax relief adjustments in the future (for example arising from changes in interest rates) will be made automatically by the lender on behalf of the Revenue.It is not necessary to claim mortgage interest relief in the annual tax return and it no longer appears on your notice of tax credits.
The following changes have been made as a result of 2010 Budget:
- Mortgages taken out from 1st January 2004 to 31st December 2011, subject to qualifying mortgage criteria, are eligible for mortgage interest relief until 31st December 2017
- Mortgages taken out from 1st January 2012 to 31st December 2012 will be entitled to mortgage interest relief at the reduced rates of 15% for first time buyers and 10% for non-first-time buyers, on the first €3,000 interest paid per individual
- Mortgages taken out after 31st December 2012 will not qualify for mortgage interest relief
- Mortgages taken out prior to 1st January 2004 are no longer eligible for mortgage interest relief. However, top up loans/equity release loans taken out since 1st January 2004 on these pre-2004 loans may be eligible for mortgage interest relief, provided they adhere to eligibility criteria as listed above
Switching lender or mortgage type to achieve a better interest rate is not the same as taking out a new loan. However, a new mortgage where you move home and take out a mortgage with a new or existing lender is eligible for relief. The interest must relate to money borrowed to purchase, repair or improve your sole or main residence The relief is subject to upper limits depending on your personal status and whether you are a first time buyer.
However, in order to notify your lender of your entitlement to TRS, the Revenue Commissioners must know your mortgage details. Many taxpayers assume this credit is added automatically by their mortgage provider. This is not the case. So it is essential that any taxpayer who is entitled to mortgage interest relief checks with their mortgage provider that credit has been granted since 1 January 2002.
If you have not claimed your credit for mortgage interest relief, you can do so retrospectively by filing returns of income for the periods involved. For the current and future years you should file a form TRS1 (which is available from www.revenue.ie) with your tax office.
