Wednesday 22 October 2014

Fear for struggling homeowners as they face cuts to tax relief

Published 10/02/2014 | 02:30

David Hall
David Hall

STRUGGLING families in arrears with their mortgages could be in bigger danger of becoming homeless after losing significant tax relief this month.

Mortgage interest tax relief is being stopped or reduced from this month for homeowners who are in arrears with repayments. A hard-pressed householder unable to repay a €300,000 mortgage could lose up to €270 a month when tax relief at source (TRS) is withdrawn this month.

Banks were warned last night not to seek repossessions based solely on this latest blow to the financial circumstances of tens of thousands of mortgage holders in arrears.

Revenue's new rule, which hits customers this month, means that TRS relief must be based only on the amount of interest actually paid to banks and not on the full amount of interest that is actually due.

Up to 140,000 homeowners are in arrears with their mortgages and they will now be financially even worse off as a result of Revenue's action.

David Hall, director of the Irish Mortgage Holders Organisation, a charity which helps people in arrears, said last night the action is "a terrible blow" to all those in arrears who depended on getting full TRS relief.

"These people in arrears could be anything from €70 to €900 a month worse off," he said.

Those 140,000 struggling homeowners represent €2.2bn in arrears outstanding to banks. A total of €1.8bn is owed by people who are more than one or two years in arrears.

"While Revenue had a valid argument in only giving relief on what interest is actually paid, this move nonetheless is pulling the mat from under people who are already in trouble," he said.

The loss of TRS relief will be "catastrophic" for some individuals, he added.

Banks can differ on how they treat customers in arrears because banks enter repayment deals only on a voluntary basis.

There needs to be an arrangement covering all banks which makes it compulsory for all of them to offer repayment deals, he said.

First-time buyers got TRS relief of 30pc between 2004 and 2008, which was worth up to €500 for couples. TRS relief will be eliminated for all homeowners at the end of 2017.

Alan O'Keeffe

Irish Independent

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