Noonan's mortgage gamble in huge push to kickstart market
Published 07/12/2011 | 05:00
FINANCE Minister Michael Noonan is gambling that his Budget deal of up to €5,000 a year in mortgage interest relief will tempt thousands of first-time buyer couples to kickstart the property market.
Mr Noonan dangled the prospect of the extra money -- but warned that buyers have just 12 months to cash in. Couples buying next year would have qualified for €900 in mortgage tax relief -- but that has now jumped to €5,000.
If they buy in 2012 they can hope the increased level of relief will last for seven years -- which could be worth a total of €35,000. But if they wait until 2013, hoping for prices to drop, they face getting nothing.
He is also using mortgage interest relief to help over 214,000 families who bought at the height of the boom and are struggling with repayments.
He made both measures a central plank of yesterday's tax Budget, amid expectations of a 0.5pc cut in interest rates tomorrow by the ECB.
Other positive measures included:
- Leaving income-tax rates and bands alone.
- The removal of 330,000 from the universal social charge net.
- Big incentives for the transfer of farmland and for exporters and investment in research and development.
However, he also hit families with increases in a range of taxes.
- A 2pc rise in VAT.
- Major increases in motor tax.
- An extra 4c on a litre of petrol and diesel due to VAT and carbon tax increases.
- A 25c increase on excise on cigarettes.
- Bringing PAYE workers who take in rental income, dividends and other investment earnings into the PRSI net - though this will not kick in until 2013.
Last night, Mr Noonan hinted that the Government may reverse one of the Budget's most controversial measures, saying the cutting of disability payments could be "worth looking at again" when the social welfare bill is brought before the Dail.