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Friend gets more tax relief than me, but I have bigger mortgage

I bought a first-time house with my then partner in 2004 which we moved into in 2005 after it was built. We split up in 2006 and I decided to buy her out. I recently got a letter saying my tax relief is being cut by €100 a month.

I had presumed that my seven years had run out but since the Budget do I not qualify for the new rules? A friend is getting more tax relief than me even though he has a smaller mortgage.

I think you may be confusing two separate issues. Yes, mortgage-interest tax relief normally ends after seven years which in your case would be the end of 2011 (if you count 2004) -- or this year if you didn't start paying until you moved in.

The 2012 Budget did make an amendment to help people like you who bought at the height of the market by introducing a special rate of 30pc for the tax years 2012 to 2017 for first-time buyers who bought their sole or main residence for the first time in the years 2004 to 2008 or paid their first mortgage-interest payment in this period.

Karl Deeter of Irish Mortgage Brokers says that this will probably kick back in "in March or April's payment" as the banks organise their systems to refund it.

Separately, he wonders whether the €100 you are down is because you are now a single person rather than a joint first-time buyer. "It seems that because you bought out your partner the relief is based on one person's interest being applied to the TRS rather than two people, which may bring it down depending on your mortgage balance".

Mortgage interest relief will be abolished altogether in 2017.

My partner and I have put off buying a house for the last two years because we thought the market would bottom out. Now it seems house prices are continuing to fall. How long more should we wait?

I get more letters about this topic that anything else. Knowing when to take the plunge is a perennial problem and the truth is there's never a "right" time.

You are correct however, in saying prices show no sign of levelling out. Indeed, they are falling at their fastest annual rate in the last two years, down 17.4pc in the past 12 months alone, according to the Central Statistics Office.

This is not helped by the continuing lack of available credit which will have an ongoing negative effect on prices.

On the basis that nobody can tell you when the "bottom" will be, perhaps you should stop crystal-ball gazing.

If you have a good deposit built up, a lender who is prepared to make up the difference and you find a house you are prepared to stay in for 5-7 years, then there is excellent value to be had.

If everyone collectively decides the market has bottomed, then prices will start increasing. Trying to judge perfectly is a mug's game.

Indo Property