Thousands more will lose mortgage relief
Published 05/01/2013 | 05:00
THOUSANDS of struggling homeowners are to be stripped of their mortgage interest relief this year, it has emerged.
Almost 7,000 mortgage holders who are in arrears lost the valuable tax relief last year. Revenue ordered banks to stop mortgage interest relief for households that were more than six months behind on their payments.
The relief is worth up to €4,000 a year for a couple in cases where both partners are named on the mortgage.
A change in policy at Revenue means that the tax relief at source is now being taken away from those who are in arrears and not even paying the interest on their mortgage.
Now experts have said that more people will lose the relief this year.
The chief executive of the Irish Brokers Association, Ciaran Phelan, said the fact that recent Central Bank figures showed almost 20,000 residential mortgages two years or more in arrears meant it was inevitable that thousands more of the worst-hit mortgage holders would lose the relief.
He added: "It seems unfair that three months' payments have to be made before relief is restored. When people are making a genuine effort to repay their mortgage, they should be assisted and tax relief surely reduces the moral hazard of simply choosing not to pay."
The Finance Minister said: "I am informed by Revenue that some 6,982 accounts have been ceased for mortgage interest relief in 2012 due to non-payment."
However, Revenue has said that "in the event of resumption of payments, then the relief can be restored following three consecutive payments".
Mortgage tax relief is a payment made to the banks of mortgage holders who qualify. It goes to the lender, with the bank then using the money to reduce the monthly payments.
Around 350,000 households are getting the relief.
In 2011, the Government gave extra mortgage tax relief to those who bought during the boom, with the additional relief worth up to €2,000 a year.