Friday 20 October 2017

Exclusive: Blow for struggling homeowners as mortgage interest relief to be cut in Budget

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Philip Ryan

Philip Ryan

Struggling homeowners are facing a major budget blow as Minister for Finance Paschal Donohoe prepares to slash mortgage interest relief by 25pc.

The relief allows homeowners who bought during the boom years claim back tax on their mortgage interest payments.

Fianna Fail wanted the tax relief protected in the budget but conceded it would have to be reduced to pay for other measures.

The tax relief will be reduced by 25pc every year for the next three years.  It is expected the reduction will save the State €50m next year.

Mr Donohoe will also raise revenue for tax cuts and welfare payments by increasing the stamp duty on commercial property sales from 2pc to 6pc which will raise €400m. An increase tax on tech companies is expected to raise €150m.

Excise duty on cigarettes will also increase and a sugar tax will be introduced later next year.

Read more: Ailish O'Hora: Retrograde move to phase out mortgage interest relief for hard-pressed homeowners could well backfire

Sinn Fein TD Pearse Doherty said that cutting mortgage relief will come as a "big blow" to many homeowners.

The Donegal South West representative said: "I think phasing out this relief will come as a big blow to people, I don't see any justification for this at this point in time.

"It will hit people, we still have around 80,000 family homes that are in mortgage arrears, this is only going to make their situation worse."

He continued to say: "We have banks that are still charging over the proper interest rates that are according to the European norm.
"Many of those banks we have large shareholdings in and the government has a step-off approach in relation to this.

"They haven't called them out on it and they haven't demanded that they reduce interest rates so we're not in a good position at all in relation to this."

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