Where do I stand on mortgage interest relief?
QI bought my family home in 2004. I understand that my entitlement to mortgage interest relief has been restricted, but that last December's Budget could have impacted on this. I would be grateful if you would clarify the position.
A You are correct that the entitlement to relief from income tax on mortgage interest relief has indeed been restricted.
Since last year, the amount of interest on which relief can be claimed is capped at €10,000 (€20,000 if married/widowed) at an initial rate of 25pc (years one and two), 22.5pc (years three, four and five) and 20pc (years six and seven) for first-time buyers.
First-time buyers for these purposes are those who claimed mortgage relief for the first time in 2003 or later.
The relief for non-first-time buyers is €3,000, or €6,000 for couples, at a rate of 15pc.
Last year's changes provided that the relief would only be available for seven years.
However, there was some good news for someone in your position in the recent Finance Bill, following last December's Budget, as the Bill provides that the relief will be extended to 2017, where the entitlement to the relief would expire in 2010 or thereafter.
The relief will be available for people who acquire property up to the end of 2012.
In this regard, qualifying loans taken out on or before 31 December 2011 will continue to get relief at current levels.
The relief is to be restricted to people who take out loans in 2012.
No mortgage interest relief will be available for loans taken out on or after 1 January 2013.
Unfortunately, mortgage interest relief is to be abolished entirely by the end of 2017.
The detail on this has been included in the Finance Bill, which has been published but has yet to come into law.
- Barry Kennelly, senior consultant, Astons Tax & Wealth Consultants.