Builders 'had no part' in extension of relief deadline
THE Department of Finance has denied that it was lobbied by developers to extend the deadline for the ending of full mortgage-interest tax relief for first-time buyers.
Any first-time buyer who buys a house in the next two years will now be able to get full tax relief on their mortgage.
This is because full mortgage relief will be available to anyone who draws down a mortgage before December 31, 2011, six months more than previously announced.
This relief is worth up to €417 a month for a new buyer couple who pay a lot in interest on their mortgage.
The new deadline is a change from the Budget, when Finance Minister Brian Lenihan said first-time buyers would no longer get the full relief from July 2011.
Mortgages taken out after December 2011 will still get mortgage interest relief, but at a reduced rate, effectively a maximum of €75 a month.
Mortgage interest relief is due to be abolished entirely from the start of 2018.
Department officials, speaking at a briefing on the Finance Bill on Thursday, denied that the deadline had been extended because of lobbying by house builders.
The officials insisted that it made more sense for the deadline to fall at the end of a year, as the tax year ends on December 31.
Frank Conway of the Irish Mortgage Corporation said the changes would have a big impact on the finances of new buyers.
"The bottom line is that potential first-time buyers need to be aware that the changes that take place after December 31, 2011, will have a significant impact, with the top level of mortgage interest relief dropping from €417 per month to just €75 per month."
In his Budget speech, Mr Lenihan said he was introducing the extended relief for new buyers to "encourage those who want to buy a house".
The Finance Bill also confirms the announcement in the Budget to extend mortgage interest relief for an additional seven years for anyone who bought after January 2004, taxation director with Chartered Accountants Ireland Brian Keegan said.
Mortgage interest tax relief normally expires after seven years, so those who bought in 2004 were due to lose the relief this year.
Mr Lenihan has thrown them a lifeline, granting an extension until the end of 2017 to those whose tax relief was going to expire in 2010 or beyond that date.