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Dan White: Mortgage interest relief tax rules have changed but no need to despair

Dan White answers your financial questions

HOW long does mortgage interest relief run for? I made my first payment on my mortgage in December 2003 and received interest relief on that payment.

However, Revenue just told me that I am no longer entitled to mortgage interest relief.

I thought it was available for seven years from your first payment, so would I not be entitled to relief up to December 2010?

Should I not be entitled to relief for 11 months of 2010? It seems unfair that if you purchase late in year, it is classed as full year in Revenue's eyes.

Nellie

From May 2009 the length of time for which homeowners could claim mortgage interest relief was cut to seven years. On the face of it this would seem to indicate that Nellie is still entitled to mortgage interest relief until November of this year.

For first-time buyers mortgage interest relief is 25pc up to a maximum of €10,000 (i.e. €2,500) for the first two years, 22.5pc in years three, four and five, and 20pc in years six and seven.

For non-first-time buyers the relief is capped at a maximum of 15pc of €3,000, a mere €450, for seven years.

So why have Revenue cut off Nellie's mortgage interest relief? What seems to have happened is that Nellie's lender didn't provide Revenue with sufficient information to determine if she still qualified for mortgage interest relief.

In those circumstances, the Revenue's policy is to automatically assume that the homeowner doesn't qualify and cut off the relief and let them reclaim it.

This means that Nellie is going to have to go to the bother of reclaiming her mortgage interest relief.

So how does she go about doing this?

She needs to complete a tax relief at source (TRS) recommencement form.

The letter she received from the Revenue Commissioners should contain instructions on how to download this form from the Revenue website.

If she hasn't received such a letter or experiences other problems reclaiming her relief then she should ring the TRS helpline at 1890 46 26 36. Before doing so she should first log on to the Revenue website, www.revenue.ie and read the section on "interest relief" which is listed under "personal tax topics" on the home page.

IN 2007, my Bank of Ireland investment manager advised me to put my €20,000 into their Evergreen Fund for six years. He said that I would be guaranteed that my capital would be safe.

According to the material I received at the time: "You are promised that the final value payable on the sixth anniversary date will be at least equal to 100pc of the initial investment amount once the policy conditions have been met."

But now I have received a statement saying that policy value is now at €19,000. I understand that investments do fluctuate up and down, and my question to you is: will my capital depreciate very much lower by 2013?

Josephine

Unfortunately for Josephine, the devil is in the detail.

While Bank of Ireland is promising that Josephine will get at least 100pc of her initial investment back "on the sixth anniversary date", it is making no such promise if the investment is cashed early.

In other words, the guarantee is restricted exclusively to the sixth anniversary date in 2013 and Bank of Ireland can do pretty much what it likes in the meantime.

On the other hand, if Josephine had put her money into savings certificates her money would be worth at least €24,200 by 2013.


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