Tax Relief at Source - Mortgage Interest Relief
Interest paid on qualifying home loans taken out after 1 January 2004 and on or before 31 December 2012 will (subject to the exceptions below) qualify for tax relief up to the end of 2017 at the following general rates and thresholds -
First time buyers
The tax relief on interest paid on qualifying home loans is 25% for years 1 and 2; 22.5% for years 3, 4 & 5 and 20% for years 6 and 7. The upper thresholds in respect of the amount of interest paid qualifying for tax relief are €20,000 for individuals who are married, in a civil partnership, widowed or surviving civil partner and €10,000 for single individuals.
After year 7, the rates and thresholds for relief are as for non-first time buyers.
Non-first time buyers
The tax relief on interest paid on qualifying home loans is 15%. The upper thresholds in respect of the amount of interest paid qualifying for tax relief are €6,000 for individuals who are married, in a civil partnership, widowed or surviving civil partner and €3,000 for single individuals.
Exception 1 (30% rate of relief)
For individuals who purchased their first principal private residence (or second or subsequent principal private residence but only where the first principal private residence was purchased on or after 1 January 2004), on or after 1 January 2004 and on or before 31 December 2008, the rate of tax relief on the interest paid on the loan to purchase that property will, for the tax years 2012 to 2017 inclusive, be 30%, subject to appropriate first time buyers and non-first time buyers threshold.
Exception 2 (certain loans taken out in 2012 and 2013)
Mortgage interest relief is available, in certain circumstances, for the tax years 2013 to 2017, in respect of:
- Interest paid on a loan taken out in 2013 to construct a home on a site, but only where such site was bought by way of a loan taken out in 2012, and
- Interest paid on a loan to repair, develop or improve a home but only where loan approval was in place in 2012 and part of the loan was used in 2012 and the balance used in 2013 on such repair, development or improvement.
In both instances above, in order to qualify for relief, any necessary planning permission must have been in place on or before 31 December 2012.
Loans taken out prior to 1 January 2004
Loans taken out prior to 1 January 2004 are no longer eligible for mortgage interest relief. However, top up loans/equity release loans taken out since 1 January 2004 on these pre-2004 loans may be eligible for mortgage interest relief, provided they adhere to eligibility criteria as listed above.
Note: The relief will be abolished completely by the end of 2017.
For more information see: Tax Relief at Source (TRS) for Mortgage Interest Relief.