Do you get TRS on missed payments?

C

ClubMan

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monore said:
Possibly asking for an interest only period but this would most likely be refused. Another consideration would be that I assume that TRS for the missing payment would be lost.
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I don't think that you can get tax relief on interest not paid.

You should do what is advised above and engage with your lender (possibly under MARP) to come to some mutually agreeable arrangement to deal with your debt.

http://www.keepingyourhome.ie/
 
In relation to the TRS, you should still be entitled to tax relief as it is still being charged to the mortgage account monthly, whether being paid or not.

Certainly I know of at least one lender that passes on the TRS whether DD paid or not. Even if Mortgage is on a Moratorium they continue to credit TRS monthly to the current account that the Mortgage is paid from.
Acknowledge that some lenders net the TRS off the monthly payment others credit it to current account as they take the payment out.
 
Can anyone clarify what happens in practice?

It should only be given on interest paid. But, is this implemented in practice?
 
Brendan Burgess said:
Can anyone clarify what happens in practice?

It should only be given on interest paid. But, is this implemented in practice?
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I would have thought the interest is incurred when it is debited to your account. Whether you have reduced your mortgage by the amount of the interest incurred is another story.
 
There is nothing about "incurred" anywhere. It is when interest is paid. It is not when it is charged.

Brendan
 
The Revenue have a peculiar view on this. They have a conceptual misunderstanding when interest is paid. Virtually all loans have separation of when interest is debited in the books of the bank (as in applied to the account) versus periodic payments credited to your account in the books of the Bank. The Revenue see these as linked, which they are not. They used to be in ancient systems which went out in the 1970s.

The Revenue in one case I am fmailiar with argued (and they love detailed technical details) that the customer was not 'paying' the interest until they made their payments.

As Corporation Tax calculations are worked on when interest is applied and accrued in respect of banks interest income, this seems irrelevant to some parts of Revenue.

Take a more sophisticated example. If you pay your mortgage out of an overdraft - are you in fact paying your mortgage?

If they attempt to disallow anyones mortgage interest regradless of your payment record - there are a range of arrguments that could be lined up - they should be challenged. If the Bank actually stops applying interest thats a different matter.

The Revenue lost a case involving dividends and book entries - Bordens Creamery Mallow if thats of interest.
 
I got paid TRS every month when on interest only and when no payments were being made at all. That was with KBC.
 
You must pay something.

If you pay nothing, you get nothing.

Assuming you're a FTB with a monthly TRS cap of €833 you'll get a TRS payment of 30% of what you paid that month up to your cap of €833.
 
Not true at all. KBC pay the TRS straight to your account, they do not take it off the mortgage. I know this because they were putting the TRS straight into my exes account when neither of us were paying the mortgage.
 
You could have a tax liability to the Revenue for receiving TRS on interest not paid.

Lets say you normally pay 1200/month in interest.

Annually you'll pay 1200 x 12 = 14400 in interest.

Lets assume your cap is 10,000 annually then you'll receive TRS on 10,000.

If you missed 2 payments then you'd have paid 1200 x 10 = 12000 in interest.

But your cap is still 10000 annually, so you'll receive the same TRS.

It only matters if the interest you normally pay is less than your cap then you will have a TRS adjustment at the end of the year.

If the interest you pay dips under your cap, then again you'll have a TRS adjustment at the end of the year.
 
That all went totally over my head lol sorry! I was just going on experience. Actually my ex was not even living in the property when he was getting the trs to just his bank account so he was totally defrauding the revenue. Wonder if I should mention that in court........
 
WizardDR

The Revenue in one case I am fmailiar with argued (and they love detailed technical details) that the customer was not 'paying' the interest until they made their payments.
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I must say that I would side with the Revenue on this.

If someone is charged €10,000 interest in a year, but makes no payment on their mortgage at all, then they should not get tax relief on it. If the mortgage is heading for default, then I suppose that the state is subsidising the bank by reducing their eventual loss.


manninp2 said:
It only matters if the interest you normally pay is less than your cap then you will have a TRS adjustment at the end of the year.

If the interest you pay dips under your cap, then again you'll have a TRS adjustment at the end of the year.
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mannin

That is an excellent description of it. But is this what happens in practice? I presume that the banks apply TRS and everyone forgets about it, unless there is a Revenue Audit.
 
In theory the trs is only supposed to be given if the full amount of interest is paid.
In reality trs is given based on interest charged.
I don't believe any bank does the first option.

Although if a person is not paying their mortgage they should apply for mortgage interest supplement and this will take the place of the trs.
 
@brendan

Need to separate the charging of the interest - which is done either monthly or quarterly by the Bank. That amounts to a debit to your account and a credit to the banks interest account and therefore its income for the Bank.

When you credit your account with payments thats an entirely separate matter.

I will have to dig out the Borden Case for interested parties, which the Revenue er lost.

In fact with the TRS lark the Revenue completely complicated what was otherwise a fairly cut and dried matter into the usual muddied waters that they love so much.
 
WizardDr said:
@brendan

Need to separate the charging of the interest - which is done either monthly or quarterly by the Bank. That amounts to a debit to your account and a credit to the banks interest account and therefore its income for the Bank.

When you credit your account with payments thats an entirely separate matter.

I will have to dig out the Borden Case for interested parties, which the Revenue er lost.

In fact with the TRS lark the Revenue completely complicated what was otherwise a fairly cut and dried matter into the usual muddied waters that they love so much.
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[broken link removed]

This?
 
@clarkey aha memories flood back, the very one ;)

Whilst not exactly on all fours with what we are talking about, it would be good precedent for the contention that the book entry of interest on your loan by the bank amounts to payment as you now owe it etc.
 
The Citizens Information Board is very clear about it here:

http://www.citizensinformation.ie/e...e/buying_a_home/mortgage_interest_relief.html


Mortgage arrears and interest-only payments

While the legislation governing mortgage interest relief provides that the relief be granted based on the amount of interest paid, most lenders operate the relief based on the amount of interest charged to an account.



This had little impact up to recently. However, in response to the growing incidence of mortgage arrears, it is intended that all lenders will operate on an interest-paid basis from the earliest possible date.


In the meantime, Revenue is working with mortgage lenders to identify accounts on which interest has not been paid for a period of 6 months or more. Tax Relief at Source (TRS) will be ceased on these accounts and will only be restored when 3 consecutive payments have been made and the borrower re-applies for the relief.
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I have asked CIB for the source for this.

Brendan
 
OK, Revenue says the following

How do I re-apply for mortgage interest relief if the relief was ceased because I made no mortgage payments but now have re-commenced payments?

An account will re-qualify for mortgage interest relief once three consecutive mortgage payments have been made. You must then complete a new online application.
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@Brendan

I am not in agreement - its as simple as this - if the bank the debit the interest to your account thats income for them and therefore you have paid. End of.

Trying to match the 'payments' and the 'interest' just to make the point:

If Bank debits the account with the interest
AND I pay from my already overdrawn Current account..making it even more overdrawn
Are you saying that I have NOT paid the interest?

This is not splitting hairs, these are conceptually different matters.

The Revenue are not always right and they do not always take consumers seriously. For example any fair minded person would see the that if the Taxpayer can ONLY go back 4 years that the Revenue should go back four years for the same reasons.

As it trasnpires, it is believed that the Revenue can go back and dig Mick Collins up and go back to 1922.

Now where is the simple fairness, logic or balanced view on that?

Note all I am saying is that the 4 years should be for both and for the same reasons i.e. fraud, cheating, deviousness, lying, stealing all excluded


Revenue NIL Patrick Thistle 2 (o/g Burgess, O'Coinliachain)
 
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