Tax relief for 'boom' mortgage holders delayed
Published 04/05/2011 | 05:00
THE Government is to delay the implementation of an election promise to give up to €166 extra a month to those who bought houses during the boom.
The move to help the "negative equity generation" will not now be in place until the end of the year at the earliest, the Irish Independent has learned.
The Government promise to give additional tax relief to people who bought between 2004 and 2008 could be worth up to €166 a month extra for a couple with a large mortgage. As many as 250,000 homeowners may benefit from the move.
The measure had been expected to be introduced this summer, but now may not come in until well into next year.
If introduced, it would give a couple with a large mortgage a total payment of up to €500 a month in mortgage tax relief.
The money would be paid by Revenue into the bank accounts of qualifying mortgage holders.
An increase in the tax relief for boom-time buyers could be controversial, though, as many who purchased at that time are able to meet their mortgage payments.
Others argued yesterday that the mortgage aid plan was one of the reasons heavily indebted middle-income families voted the Government into power at a time when mortgage rates were rising.
The new measure had been expected to form part of the Government's jobs initiative. But Finance Minister Michael Noonan confirmed in a Dail answer yesterday that the changes would not now be introduced before December's Budget.
Also part of what has been labelled help for the "negative equity generation" is a plan to force domestic lenders to wait at least two years before making moves to repossess homes of those who are in arrears.
Around 80,000 mortgage holders are struggling to meet their repayments.
The Programme for Government also promises to introduce measures to force lenders supported by the State to cut variable rates by 0.25pc by making internal savings.
Fine Gael had promised to bring this in within 100 days of gaining power.
However, prospective buyers will gain as the Government has rowed back on plans to end their tax relief from June. The generous relief will now stay in place until the end of the year.
New buyer couples can get up to €416 a month in relief. This is worth up to €31,500 over a seven-year period for new buyers, according to Karl Deeter of Irish Mortgage Brokers.
The Government's plan had been to part-finance the higher tax relief for those who bought between 2004 and 2008 by abolishing the tax relief for first-time buyers by June.
Mr Noonan said in a written Dail reply that the Government was committed to helping homeowners in distress.
"One of these proposals relates to increasing mortgage interest relief to 30pc for first-time buyers who bought between 2004 and 2008 and to finance this in part by abolishing mortgage interest relief for new buyers from June 2011.
"When this proposal has been thoroughly examined and analysed and the findings and recommendations are presented to me, I will decide on the appropriate action to be taken.
"However, it is unlikely that any measures will be introduced before Budget 2012."
A spokesman said last night that Mr Noonan was not ruling out the extra tax relief for boom-time buyers but the Revenue Commissioners had raised concerns about changing the tax relief system halfway through the tax year.