Homeowners Lose Mortgage Interest Relief

Controversy has been sparked after it emerged that mortgage relief is to be stopped from tomorrow for 57,000 people currently receiving the benefit.

The entitlement is to be suspended from 1 May for everyone except first-time buyers after a Government announcement in its supplementary Budget to limit mortgage interest relief to seven years.

As of the end of last year 562,000 people receiving mortgage interest relief but now under the new system, the tax relief on monthly mortgage interest payments known as TRS will only apply for the first seven years after someone buys a property for use as their home.

Opposition parties in the Dáil accused the Government of creating confusion over the issue.

Labour Spokesperson on Finance Joan Burton TD said a huge amount of doubt remained surrounding the changes.

"Worried people from around the country have been in contact with me to outline their concern and confusion.

"They had understood that as long as they had not been receiving tax relief on the interest of their current mortgage for more than seven years, they would continue to receive the relief until the end of that seven year period. This is certainly the impression given by the Taoiseach when he spoke on budget day."

"Families who have been hit by a range of extra taxes and levies are obviously concerned that they were going to be hit with yet another cut in income."

According to the Government Revenue Department, the move means mortgage interest relief will be suspended for 321,000 of the 562,000 people currently receiving the entitlement.

A report from the Department published today said that with effect from 1st May the number of tax years in respect of which mortgage interest relief may be claimed is 7 years for first time and non first time buyers.

" If you are a first time buyer, and in receipt of mortgage interest relief for less than 7 years, you will continue to receive TRS until the end of the seventh year. This includes those mortgage holders where 2009 is the seventh year of relief.

"If you are a non-first time buyers i.e. you have been in receipt of mortgage interest relief for more than seven years, it would appear in the absence of detailed information, that you are no longer eligible for mortgage interest relief from 1st May 2009."

Mortgage holders who have the relief suspended but are entitled to continue to receive it will have it reactivated in June, all arrears included.

220,000 first-time buyers will not be affected by the move and will continue to receive the entitlement.

(DW/BMcC)