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Thousands Of Irish Homeowners To Get Up To €1,250 Back In Their Pockets: Mortgage Interest Tax Credit Extended

2 October, 2024 - 8:32AM
Thousands Of Irish Homeowners To Get Up To €1,250 Back In Their Pockets: Mortgage Interest Tax Credit Extended
Credit: thesun.ie

Mortgage Interest Tax Credit Extended: Thousands of Homeowners To Receive Up To €1,250 Refund

Fianna Fáil is pushing for the continuation of the relief into next year, aiming to provide support for families who have faced increased mortgage repayments due to a series of interest rate hikes within a short period. This has been a crucial measure for numerous households struggling with high interest rates while juggling other cost of living challenges. This is an effective measure for many households who have encountered significant increases in their mortgage repayments in recent times.

The relief was initially introduced in 2023 as a one-year measure by the then finance minister, Michael McGrath. Finance Minister Jack Chambers is prepared to propose a further extension of the relief for a year, with the relief set to be based on the rise in interest paid in 2024 compared to the interest paid in 2022.

Who Qualifies for the Mortgage Interest Tax Credit?

To be eligible for the scheme, households must have an outstanding mortgage balance between €80,000 and €500,000 as of December 31, 2022. The relief is available to all homeowners with an outstanding balance of between €80,000 to €500,000 as of December 2022. The credit is available for the increase in interest paid in 2023 over that paid in 2022.

How Does the Mortgage Interest Tax Credit Work?

The relief is provided at the standard rate of income tax. The amount of qualifying relief is capped at €6,250 per property, which translates to a maximum tax credit of €1,250. Mortgage holders need to file an income tax return, including proof of interest rate increases.

More Than 25,000 Have Claimed the Relief, But Many More Are Eligible

Since its inception, over 25,000 mortgage holders have claimed the relief, but it is believed that there are many more households eligible who are yet to file a claim. The Government and Revenue have been urged to do more to promote a valuable mortgage tax relief after a survey revealed half of the respondents have never heard about it. A survey by accountancy and refunds consultancy Taxback, which had 1,400 respondents, found 51pc had never heard of the mortgage tax credit.

The Importance of the Mortgage Interest Tax Credit

The tax credit was announced in the last budget, with the then finance minister Michael McGrath saying it was a one-off measure. However, it could be extended in next month’s Budget. It covers changes to mortgage repayments over the course of last year and is worth up to a maximum of €1,250.

Government Urged To Promote The Credit

Taxback said this means more must be done to promote the mortgage interest tax credit and other tax reliefs available to homeowners in Ireland. The Government introduced the mortgage tax credit in Budget 2024 with the aim of alleviating cost-of-living pressures on homeowners. Marian Ryan, director of business development with Taxback, said: “In June, then finance minister Michael McGrath confirmed that just over one in 10 individuals who are entitled to claim the mortgage interest tax credit have done so.”

Unclaimed Tax Entitlements

Ms Ryan said the credit was roundly welcomed when it was introduced last October, but said: “It is clear from both the results of our survey and the figures released by the Government that lack of awareness is a key factor as to why uptake of the credit is so low. “With this in mind, it’s clear that more needs to be done to highlight this credit and its benefit to eligible homeowners.”

Raising Awareness Is Key

Ms Ryan said there was a need to equip taxpayers with the knowledge and encouragement to pursue their tax entitlements. “When taxpayers do not have a ­comprehensive understanding of their tax entitlements, the result is often thousands of euro unclaimed from the taxman,” she said. “Ultimately, the money you’re entitled to should stay in your pocket, not be left on the taxman’s desk.”

Key Items In The Budget Set To Be Finalized This Week

The extension of the mortgage interest tax credit is just one of the many measures being considered for the upcoming Budget 2025. It is expected that many of the key items in the budget will be hammered out on Thursday when both Mr Chambers and Public Expenditure Minister Paschal Donohoe hold a series of meetings with their Cabinet colleagues who each has a wish list of demands.

Looking Ahead

This extension of the mortgage interest tax credit comes as a welcome relief to many homeowners in Ireland who are facing rising interest rates and cost of living pressures. This measure shows the government’s commitment to supporting homeowners and ensuring their financial stability during challenging economic times. The government is also looking at other measures to help renters and homebuyers, such as the extension of the Help to Buy scheme and an increase in the rent tax credit. It is anticipated that these measures will be finalized in the coming weeks and will be part of the Budget 2025 announcement.

A Positive Step Forward

This extension of the mortgage interest tax credit is a positive step forward for homeowners in Ireland. It demonstrates the government's commitment to helping those struggling with rising costs. With these measures in place, the government is hoping to create a more stable and affordable housing market for all.

Tags:
Finance Tax credit Mortgage loan
Emily Brown
Emily Brown

Business Analyst

Analyzing the financial world one report at a time.