# Do you get TRS on missed payments?



## ClubMan (12 Jan 2012)

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.


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/


----------



## Quest (12 Jan 2012)

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.


----------



## ClubMan (12 Jan 2012)

Strange - while not authoritative the title of this guide is clear (emphasis is mine)



> Tax Relief for Mortgage Interest *Paid* on a Home Loan



http://www.revenue.ie/en/tax/it/leaflets/tax-relief-source-mortgage-interest-relief.html


----------



## Brendan Burgess (6 Nov 2012)

Can anyone clarify what happens in practice? 

It should only be given on interest paid. But, is this implemented in practice?


----------



## Clarkey (6 Nov 2012)

Brendan Burgess said:


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



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.


----------



## Brendan Burgess (6 Nov 2012)

There is nothing about "incurred" anywhere. It is when interest is paid. It is not when it is charged. 

Brendan


----------



## WizardDr (6 Nov 2012)

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.


----------



## Hope2divorce (6 Nov 2012)

I got paid TRS every month when on interest only and when no payments were being made at all. That was with KBC.


----------



## manninp2 (6 Nov 2012)

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.


----------



## Hope2divorce (6 Nov 2012)

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.


----------



## manninp2 (6 Nov 2012)

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.


----------



## Hope2divorce (6 Nov 2012)

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........


----------



## Brendan Burgess (7 Nov 2012)

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.



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.



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.


----------



## rameire (7 Nov 2012)

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.


----------



## WizardDr (7 Nov 2012)

@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.


----------



## Clarkey (7 Nov 2012)

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.
> 
> ...



[broken link removed]

This?


----------



## WizardDr (7 Nov 2012)

@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.


----------



## Brendan Burgess (3 Dec 2012)

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.
> 
> ...



I have asked CIB for the source for this.

Brendan


----------



## Brendan Burgess (3 Dec 2012)

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.


----------



## WizardDr (3 Dec 2012)

@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)


----------



## Brendan Burgess (3 Dec 2012)

WizardDr said:


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



and



> @BB if M/s Sue, Grabbit & Runne (Solicitors) are involved it will cost money.



Hi Dr

You are in great form today!

Brendan Thistle


----------



## eirman (10 Dec 2012)

*TRS To Be Withdrawn If You Are 6+ Months In Arrears*

Revenue are telling banks not to pay/allocate mortgage interest relief (TRS) against mortgages that are more than 6 months in arrears.

I heard this in the paper reviews this morning (10th ... Newstalk & RTE). Charlie Weston, probably in the indo .... Nothing on revenue.ie

Does anyone know more


----------



## ClubMan (10 Dec 2012)

It's not 6 months in arrears - it's 6 months of NO repayments according to the _Indo_:

http://www.independent.ie/business/...it-mortgages-suffer-new-tax-blow-3320177.html



> A spokeswoman for the Revenue Commissioners told the Irish  Independent that where no payments have been made on a mortgage for six  months or more the taxman has now ordered that the valuable mortgage tax  relief be removed.
> "Where no payments have been made for six months, the relief is ceased," the spokeswoman said.


I believe that it was mis-reported as 6 months of arrears on _RTÉ Radio _this morning too. I heard this and got a bit worried for some people I know who are in arrears but who are still making reduced repayments.

6 months of no repayments at all is probably strong evidence of an unsustainable mortgage so giving tax relief is arguably a waste. In any case if no interest is being paid then it's difficult to see how/why interest tax relief should be provided.

Update: _Brendan's _earlier post and this Revenue FAQ suggests that there is nothing new here in terms of _Revenue's _policy on granting mortgage interest tax relief in spite of the media's shock horror reporting....



> *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.


----------



## WizardDr (10 Dec 2012)

I read with interest Charlie Weston in the Independent.

This is one of these matters where I think Revenue is simply wrong.

Logically - if you pay your mortgage out of an already overdrawn account then, you are 'not' paying the interest either.

If folk think this is 'different' then all the Banks should is debit the interest as before..to the mortgage account...

Then CREDIT Mortgage Account DEBIT Current A/c
Then DEBIT Mortgage Account CREDIT Current A/c

..and its on all fours with a payment out of an overdraft.

All we need is to get a refusal from Revenue for a taxpayer-  then Appeal Commissioners (who often side with Revenue) and a Circuit Court case. 

They have lost a previous dividend cash with the same wish washy arguments.

Are people afraid of these folk?


----------



## ClubMan (10 Dec 2012)

I don't really understand your post to be honest. 

But my main point is that there seems to be nothing new here regardless of the _Indo _report. Unless the policy of stopping _TRS _when NO repayments were made for 6 months was not actually applied before and _Revenue _are only going to start enforcing it now? 

And some of the reporting seems to be totally inaccurate - e.g. it's not people who are in 6 months of arrears who need worry but those who have made NO repayments for 6 months.


----------



## Brendan Burgess (10 Dec 2012)

ClubMan said:


> But my main point is that there seems to be nothing new here regardless of the _Indo _report. Unless the policy of stopping _TRS _when NO repayments were made for 6 months was not actually applied before and _Revenue _are only going to start enforcing it now?



Hi ClubMan

That is it. This was not enforced but since October, the banks have been told to enforce it.


----------



## eirman (10 Dec 2012)

ClubMan said:


> It's not 6 months in arrears - it's 6 months of NO repayments according to the _Indo_:
> 
> http://www.independent.ie/business/...it-mortgages-suffer-new-tax-blow-3320177.html
> 
> I believe that it was mis-reported as 6 months of arrears on _RTÉ Radio _this morning too. I heard this and got a bit worried for some people I know who are in arrears but who are still making reduced repayments.



Thanks for the clarification


----------



## Time (10 Dec 2012)

I has in front of me a mortgage statement for a house where no repayments have been made for over 3 years yet each month the bank is collecting their TRS.


----------



## Brendan Burgess (10 Dec 2012)

Time said:


> I has in front of me a mortgage statement for a house where no repayments have been made for over 3 years yet each month the bank is collecting their TRS.



A very good point! 

Who is losing out by this decision? 

The borrower owes more if they don't get the TRS.

But if they are going to default anyway, it is the bank which stands to lose. 

Brendan


----------



## ClubMan (10 Dec 2012)

Brendan Burgess said:


> Who is losing out by this decision?


Taxpayers? I take it that the bank are collecting the _TRS _paid by _Revenue _to the borrower to at least recoup that amount of interest on the loan? I presume (and hope!) that a mortgage with no repayments at all (other than via _TRS_?) for three years and which has not moved on to some other stage such as repossession is an uncommon case...?


----------



## Time (10 Dec 2012)

It is a subprime lender that has had their latest attempts at repossessions shot down by the high court. 

The person has told me that they have not had any movement by the lender in at least the last 2 years. He is trying to get a letter of unsustainability from them so he can apply for social housing. Not a peep from them.


----------



## ClubMan (11 Dec 2012)

I see. Unusual circumstances so I guess? Still seems odd that _TRS _is being paid. Maybe that will stop now under this alleged new line from _Revenue _on stopping _TRS _when no repayments have been made for more than 6 months? Also seems odd that the borrower is not paying anything at all - even a token repayment. I thought that making some sort of repayment would be better than nothing especially if/when it comes to the borrower being chased for the debt, court proceedings etc.?

Anyway - that's sort of veering off topic I guess...


----------



## Time (11 Dec 2012)

He has not paid a red cent in over 3 years, he wants the bank to take the house but the bank are not biting.


----------



## ClubMan (11 Dec 2012)

Time said:


> He has not paid a red cent in over 3 years, he wants the bank to take the house but the bank are not biting.


Surely he's digging a hole for himself as if/when they do take it he will still owe the outstanding balance - including any accrued/capitalised interest/arrears? And if/when the lender chases the debt through the courts isn't it likely that a judge might take a dim view of him not making even token repayments along the way?


----------



## Time (11 Dec 2012)

He does not care a bit. 

On social welfare, living in council housing they won't see a cent.


----------



## ClubMan (12 Dec 2012)

Time said:


> He does not care a bit.
> 
> On social welfare, living in council housing they won't see a cent.


Well if the lender chases any outstanding debt through the courts he could well end up having to pay something or face the consequences.


----------



## Time (12 Dec 2012)

Really? My client is a bankrupt. They will never see a penny and what can they do? Cry over spilt milk?


----------



## Brendan Burgess (13 Dec 2012)

I had emailed Revenue some time ago on this, and have just got an official reply: 



> From its introduction in 2002 mortgage interest relief at source has been calculated on either interest paid or interest charged basis, depending on the lenders various IT infrastructures. The use of the interest charged basis was facilitated because its usage had minimal impact on the overall amount of relief granted, as the level of mortgage arrears was low. However, as a safeguard mechanism, where cumulative mortgage arrears existed for over 18 months, there was and continues to be a specific requirement on lenders to notify Revenue of the particular circumstances to allow a determination be made as to continued eligibility or otherwise on a case by case basis.
> 
> In addition lenders are also required to report cases where no payments have been made for a 6-month period to allow Revenue determine continued eligibility to the relief on an individual basis.  Revenue takes a prudent approach and lenders are not required to report details of mortgage arrears to Revenue until there are cumulative mortgage arrears over a period. In such cases, lenders are required to provide information regarding the precise nature of the arrear such as whether the customer is making interest payments and if so, the amount so that a determination can be made on continuing eligibility. Each case is considered on its individual merits before a decision is made on the appropriateness of continued mortgage interest relief on a particular mortgage account.  In light of increasing non payment, or arrears of mortgage repayments and to protect the Exchequer against any over issue of the relief where clearly eligibility no longer exists, Revenue advised lenders in October that relief should be calculated by the interest paid method only.


----------



## Time (13 Dec 2012)

Are Revenue going to audit banks where they continued to claim TRS unlawfully?


----------



## ClubMan (13 Dec 2012)

Brendan Burgess said:


> I had emailed Revenue some time ago on this, and have just got an official reply:


Just to be pedantic (ahem!) is the word "capital" below implied or something? If not then the underlined bit is presumably moot since if they are making interest only repayments then obviously they are not making "no repayments". 


> In  addition lenders are also required to report cases where no [capital?] payments  have been made for a 6-month period to allow Revenue determine continued  eligibility to the relief on an individual basis.
> 
> ...
> 
> In such cases, lenders are required to provide  information regarding the precise nature of the arrear such as whether  the customer is making interest payments


----------



## Bronte (13 Dec 2012)

ClubMan said:


> Surely he's digging a hole for himself as if/when they do take it he will still owe the outstanding balance - including any accrued/capitalised interest/arrears? And if/when the lender chases the debt through the courts isn't it likely that a judge might take a dim view of him not making even token repayments along the way?


 
If you're on the dole the courts won't make you pay anything. I know two mortgages that are months in arrears and they just keep sending statements from one department and threats from another. The people want the properties repossessed but the banks are very slow. Even though apparently the sub primers are very active one of these I've mentioned is sub prime. 

For people whose credit rating is shot anyway, people are beginning to learn that they've nothing more to lose.


----------

