Thursday 23 February 2017

Summer refund of up to €500 for homebuyers at height of boom

Michael Brennan and Charlie Weston

BOOM-buyer couples who bought homes at the height of the property bubble will receive tax refunds of up to €500 by the summer.

The payout will be given to the "negative equity generation" after the higher mortgage tax relief promised in the last Budget is paid.

The €52m in additional tax relief, which will be paid out each year, will provide some breathing space to the thousands of people who bought at the height of the market.

The Budget increase in mortgage interest relief was supposed to be applied from the start of January last for the 270,000 people who bought houses between 2004 and 2008.

But the full, extra relief has been delayed by the need to upgrade the computer systems of the Revenue Commissioners and mortgage lenders such as AIB and Bank of Ireland and Permanent TSB.

Half of the higher tax relief amount has been paid to the boom buyers.

But difficulties reprogramming computers in banks and in the tax office has meant that many homeowners may not get the new higher rate of mortgage tax relief until June.

A spokesman for Revenue confirmed that the full 30pc relief would be backdated to January 1. This could mean windfalls of up to €500 for some couples and €250 for those who bought alone.

"Revenue is currently engaging with all of the lenders in arranging to have the new rate tested and implemented as soon as possible," a spokeswoman said.

The backdated tax relief will be a welcome boost for the negative equity generation.

Deadline

These homeowners are believed to account for a large chunk of the 107,000 families who are either in arrears or have had to go to their lender to get their repayments reduced.

The higher mortgage tax relief is worth up to €2,000 a year for some couples.

The Revenue said that it could not give a date as to when all the lenders would be able to pass on the full 30pc mortgage interest relief. "The speed with which the software changes can be developed and implemented by lenders varies from lender to lender," it said.

In the meantime, some banks have been giving the "negative equity" generation an interim mortgage relief rate of 25pc.

This rate was already available on computer systems because it is given to first-time buyers.

The Revenue said the additional 5pc relief would be passed on when the computer systems were upgraded.

Mortgage interest relief is paid using the "tax relief at source" system, so that the banks can reduce mortgage repayments by the correct amount.

A spokesman for Permanent TSB said that it could be May or June before it would be in a position to pay its boom-buyer mortgage holders the new tax relief amount.

Bank of Ireland said it was told by Revenue that the implementation of the 30pc mortgage tax relief rate was imminent.

"Any refunds due from January 2012 will be sent by the Revenue to Bank of Ireland who will make the adjustments for the full mortgage relief," a spokesman said.

AIB was unable to give a deadline for applying the higher tax relief to mortgage accounts.

Irish Independent

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