# Will tracker mortgages be taxed at next budget



## Afterflood

Hello all,

I was speaking with a friend who works for one of the big 2 banks at weekend and he told me that there is a rumor that the government is planning ot tax tracter mortgages in this years budget.

I think the idea is that since tracker holders are in actuality doing well as regards mortgage payments and are in a way being subsidised by variable rate holders that the government will look for a little additional tax from the tracker holders.

My friend thinks that it will be a 1 or 2% payment on the mortgage payment similar to what they do with life type savings schemes at the minute.

Might be a good way for the government to raise a few bob.

If anyone can confirm I would appreciate.


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## thespecialon

and what happens if ECB raise rates? Wil they reduce the tax then? Sounds unworkable and highley unlikely but thats just my opinion and I dont work in a bank. If you sign up for  a variable rate, you know the rate is goiing to be variable,you are not subsidising anyone else,just paying for your own decision in my opinion


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## venice

I have never heard anything so ridicules, cant and wont happen


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## RMCF

As a tracker holder, I can't see this happening either.

I appreciate that us with trackers are on the pigs back so to speak, but it would be going against the contract I signed with the bank when I took out my mortgage.

I think legally they couldn't do it. It was a contract I signed between me and the bank, not me and the Gov.


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## Howitzer

5 years too late I'm afraid. 

A lot of people apportion some blame for the Irish Housing Bubble with the ECB and the low interest rate policy it adopted but the Government of the day was perfectly within it's rights to apply a levy of 1-2% on all mortgages drawn down in the country. Essentially negating the excessively low ECB rate. 

At the time it would have been a very good idea. In reality we had the opposite policy, with Mortgage Interest Relief inflated to ridiculous levels.

Introducing this today on all Tracker mortgages only would not be possible in my opinion. All or nothing I'm afraid. At the most practical level - not all trackers are at the same level. In fact some Fixed rates taken out a couple of years ago may be at a lower rate than some Trackers.


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## racer

A friend of mine who has a tracker was saying they expect to lose their TRS. Was saying they may tinker with it in the budget to try and help people who have being hit by bank rate increases. Again this is all speculation from media. We will have to wait till December to see.


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## Mrmr

It's a ridiculous suggestion IMO.
Yes a tracker is of benefit at the moment.So in that case we should look at all benefits everyone has, and tailor a tax package for each individual


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## Joe Q Public

The govt could easily remove TRS from tracker mortgages.


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## Neg Covenant

The trackers are only unprofitable because our banks destroyed their balance sheets by exploiting ignorant borrowers and the government destroyed its credit rating with a structural tax deficit.   Those with trackers are labouring under debts, some of them very large.

There should be tax on people with houses with no mortgages.  That would be a tax on assets and wealth rather than a tax on debt.

Of course the grey brigade wouldn't want to have to pay something to the generation they have totally screwed.   Better to screw those doing worst and labouring under huge debts, pay cuts and increased taxes a bit more.


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## aristotle

No point taxing trackers, they are a dying mortgage product that will continue to shrink as people pay them off, move to variables (as a result of moving house etc). 

I would expect the Govt would want a more stable and predictable taxable source than tracker mortgages. As mentioned it would be easier to remove TRS.

Maybe they are planning a tax on all mortgage repayments? Surely there are better ways of increasing the tax take.


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## RMCF

aristotle said:


> No point taxing trackers, they are a dying mortgage product that will continue to shrink as people pay them off, move to variables (as a result of moving house etc).
> 
> *I would expect the Govt would want a more stable and predictable taxable source than tracker mortgages*. As mentioned it would be easier to remove TRS.
> 
> Maybe they are planning a tax on all mortgage repayments? Surely there are better ways of increasing the tax take.



But it would only be a short term way of gathering quick money, assuming they actually try to do it.

Personally I would agree with tracker holders losing their TRS - they have not had any of the increases that other SVR mortgage holders have been hit with (and will continue to be hit with) so they could pay some way.


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## Mpsox

Note where the original "rumour" came from. Obviously this has absolutely nothing to do with banks trying to panic people into moving from their trackers to variable rate mortgages. !!!


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## micheller

RMCF said:


> Personally I would agree with tracker holders losing their TRS - they have not had any of the increases that other SVR mortgage holders have been hit with (and will continue to be hit with) so they could pay some way.



But trackers and SVR's are different products, that's why they are treated differently  In that case there was no point in borrowers making any lending choices if we're just going to screw everyone anyway.


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## Luternau

RMCF said:


> Personally I would agree with tracker holders losing their TRS - they have not had any of the increases that other SVR mortgage holders have been hit with (and will continue to be hit with) so they could pay some way.



You cant tax someone more just because they have been lucky. What if their luck changed-loss of job; illness etc-How could you draft the finance bill for a luck clause?
Next someone will suggest that when it comes to capital gains tax you should pay more tax if the asset was paid off with a tracker or lower priced loan as its unfair on those that have the same gain on a similar asset but had to pay a higher rate of interesr on the loan used to acquire it.
Banks conned the Govt before saying they were rich beyond wildest dreams and now perhaps they are conning them on the price of wholesale money and mortgage losses. Govt should be drafting legislation to ensure banks cannot penalise those on SVR's.


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## Afterflood

I have a tracker myself and I dont want to see anymore taxes, believe me.

However I do think the government is genuinely looking at taxing tracker mortgages. 

People wouldnt be being taxed becuase they are lucky but becuase they choose to avail of a tracker mortgage like peope are taxed when they choose to avail of a pint, or petrol or any other taxed item.

People could switch to another type mortgage if they like and thereby avoid the tax.

We will have to wait and see i guess.


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## Luternau

> However I do think the government is genuinely looking at taxing tracker mortgages.


How could they assess this?



> People wouldnt be being taxed becuase they are lucky but becuase they choose to avail of a tracker mortgage like peope are taxed when they choose to avail of a pint, or petrol or any other taxed item.


Different things-buying a pint or petrol attracts VAT or Excise. What tax type would apply to a tracker mortgage?



> People could switch to another type mortgage if they like and thereby avoid the tax.


Its not a simple matter to do this and just like banks, the Govt could not encourage someone to do something that may not be in there best financial interests.

If you can post back with an example of another country that has successfully brought in a tax similar to this I will eat my mouse!


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## Artois

I suppose on the basis that all taxes have to equitable the Government will have to tax fixed rate mortgage holders when interest rates increase and they begin to appear to have made a shroud decision.  

Taxing trackers sounds daft and ridiculous. Most people who borrowed in the last few years are struggling, tracker or no tracker. The government would simply be pushing more people towards defaulting.


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## PaddyW

Ridiculous idea. I didn't borrow over the odds, I borrowed just about twice my salary and luckily enough I will have a tracker in January next year. Why should I be taxed for borrowing wisely and not above my head. Bail out bankers who gambled incessantly yet tax those who borrowed wisely? What a load of...


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## DerKaiser

Afterflood said:


> I think the idea is that since tracker holders are in actuality doing well as regards mortgage payments and are in a way being subsidised by variable rate holders that the government will look for a little additional tax from the tracker holders.
> 
> My friend thinks that it will be a 1 or 2% payment on the mortgage payment similar to what they do with life type savings schemes at the minute.
> 
> Might be a good way for the government to raise a few bob.


 
I can see some logic in this i.e. the neutral going rate for borrowings could be ECB + 2% and anyone doing better than this would pay something akin to Benefit in Kind taxation.

By the same token anyone with savings earning above say ECB should pay marginal tax on the excess (less any dirt already payable).

I wouldn't agree with either, I doubt they would be workable in any case.


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## serotoninsid

paddyw said:


> why should i be taxed for borrowing wisely and not above my head. Bail out bankers who gambled incessantly yet tax those who borrowed wisely? What a load of...


+1


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## TRipley

+5000 !


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## Joe Q Public

The abolition of TRS for trackers would be seen as a form of tax.


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## Paulk

Many people on trackers are no longer eligible for TRS anyway, as they secured their mortgage over 7 years ago. If the abolishment of TRS relief for tracker customers is to be introduced, it would only be people who took out a tracker mortgage over the last 7 years who would be penalised. Surely this in itself would be inequitable, as recent mortgage borrowers have more money to pay back, yet they would be the ones being punished? 

I think that there is a lot of unnecessary speculation going on here...It's interesting to note that the thread entitled "any chance of banks wriggling out of trackers" has not been active for over 6 weeks. http://www.askaboutmoney.com/showthread.php?t=135875 
This is because, at this stage, people know that the banks have no way of reneging on tracker deals.

Similarly, I'm sure that this thread will become inactive soon, as it is pure speculation which is highly unlikely to ever materialise.


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## Joe Q Public

When were the last trackers available?


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## nacho_libre

Joe Q Public said:


> When were the last trackers available?



I think the banks ceased giving out tracker mortgages at the end of 2008. 

However, there are many people out there who signed up for mortgages 
which had a few years fixed and then automatically went on to trackers 
for the remainer of the mortgage term. 

So, there are people who are just being converted onto tracker mortgages 
as we speak, although their contract agreement would have been signed 
2 or 3 years ago.


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## Joe Q Public

Thanks for that.


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## Sunny

Ha ha. Taxing people with tracker mortgages. That's the best urban legend with regard to the budget yet!

It's ridiculous. I think whoever suggested was pulling your leg.


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## Shawady

nacho_libre said:


> I think the banks ceased giving out tracker mortgages at the end of 2008.


 
Banks are still giving tracker mortgages but nothing like the interest rates they were a couple of years ago.


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## Joe Q Public

Ecb + 5%?


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## Shawady

ECB + 2.15% is the best I've seen in my bank.


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## Joe Q Public

Not bad now all the same.


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## nacho_libre

Shawady said:


> Banks are still giving tracker mortgages but nothing like the interest rates they were a couple of years ago.



Which banks are still giving tracker mortgages?


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## Shawady

Nib.


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## NorfBank

Shawady said:


> Nib.



Really? Since when?


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## dobbins

I think it's safe to assume we'll all be paying extra taxes (hidden and not so hidden) after the next budget, tracker mortgage or not!


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## serotoninsid

Paulk said:


> I think that there is a lot of unnecessary speculation going on here...It's interesting to note that the thread entitled "any chance of banks wriggling out of trackers" has not been active for over 6 weeks. http://www.askaboutmoney.com/showthread.php?t=135875


Last time I checked that thread was locked for some reason (?).  I wanted to add to it as I got a call from my bank asking for proof again of insurance cover (this - after they asked for written confirmation last year).  I was curious if this was normal - or are they keeping a closer tab on it for other reasons?


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## nacho_libre

Shawady said:


> Nib.



According to their website they only offer the following mortgage types:

Variable Rate Mortgage
Offset Mortgage
LTV Mortgage

None of which are trackers


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## RMCF

afaik, there are no new tracker mortgages getting offered by *any *Irish bank/


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## jinx9000

Paulk said:


> Many people on trackers are no longer eligible for TRS anyway, as they secured their mortgage over 7 years ago. If the abolishment of TRS relief for tracker customers is to be introduced, it would only be people who took out a tracker mortgage over the last 7 years who would be penalised. Surely this in itself would be inequitable, as recent mortgage borrowers have more money to pay back, yet they would be the ones being punished?
> 
> I think that there is a lot of unnecessary speculation going on here...It's interesting to note that the thread entitled "any chance of banks wriggling out of trackers" has not been active for over 6 weeks. http://www.askaboutmoney.com/showthread.php?t=135875
> This is because, at this stage, people know that the banks have no way of reneging on tracker deals.
> 
> Similarly, I'm sure that this thread will become inactive soon, as it is pure speculation which is highly unlikely to ever materialise.




that thread is just sleeping...........property tax in 2011/12 will mean valuations of houses. these valuations will be used to calculate updated LTV's. If your on an LTV tracker and you fall outside the boundries, your screwed!


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## Joe Q Public

Maybe this is their devious plan?


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## Troy McClure

This sounds like something a bank official might say to someone to try and get them to fix and give up their tracker. They would do anything to get people to give up trackers.
That said I dont think the government taking TRS away from some trackers mortgages is a bad idea when looking for cuts


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## Paulk

I'm not sure how realistic or profitable this would be for the Government as most tracker customers are no longer eligible for TRS anyway, since  they secured their mortgage over 7 years ago. 

If the abolishment of TRS  relief for tracker customers is to be introduced, it would only be  people who took out a tracker mortgage over the last 7 years who would  be penalised. Surely this in itself would be inequitable, as recent  mortgage borrowers have more money to pay back, yet they would be the  ones being punished?


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## minion

Troy McClure said:


> This sounds like something a bank official might say to someone to try and get them to fix and give up their tracker. They would do anything to get people to give up trackers.



Sounds like that to me too.
I know how the government are goin to increase tax, without increasing tax anyway.

They are going to remove the  €400 rent relief that renters get.  Why on earth do people get tax back on rent is the thinking.  They are also toying with removing TRS on all mortgages too.  Not just trackers.

So there you have it.  €400 a year from each tax paying tenant, you could even get 4 or 5 x €400 per house where people are sharing.


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## Troy McClure

The rent tax relief was started to get landlords registered. As tenants needed landlords PPS numbers to get the relief.

They are already doing away with TRS. It's been phased out. From the end of next year I think.


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## Paulk

minion said:


> They are also toying with removing TRS on all mortgages too.  Not just trackers.
> .



Hi Minion, what is your source on the above?

Can you imagine if they remove TRS from all mortgages - with rising variable rates and no more TRS, more and more people will default on mortgage repayments. This could turn out to be a complete mess.


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## minion

Troy McClure said:


> The rent tax relief was started to get landlords registered. As tenants needed landlords PPS numbers to get the relief.
> 
> They are already doing away with TRS. It's been phased out. From the end of next year I think.



More money made from getting rid of rent relief than is made from non compliant landlord being caught by it.  Creation of the PRTB has increased the number of landlords registering.  The number of non comliants isnt really that high.  Its a no brainer to remove it.

Paulk,
I cant tell you my source but its a good one.
Removal of TRS and rent relief is a far easier pill to swallow than property taxes and income tax incrases.


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## Shawady

nacho_libre said:


> According to their website they only offer the following mortgage types:
> 
> Variable Rate Mortgage
> Offset Mortgage
> LTV Mortgage
> 
> None of which are trackers


 
I have just got a tracker from them but I am an existing customer. It is 2.15% above ECB.
I should have mentioned that I already have my mortgage with NIB and have recently got a second loan from them to do an extension. Because my existing mortgage is on a very generous tracker we wanted to keep the two loans seperate. The original tracker is 0.5% above ECB and the new one is 2.15% above ECB.

Maybe they are not doing trackers anymore for new mortgages?


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## serotoninsid

*NIB Mortgage Review*



serotoninsid said:


> Last time I checked that thread was locked for some reason (?).  I wanted to add to it as I got a call from my bank asking for proof again of insurance cover (this - after they asked for written confirmation last year).  I was curious if this was normal - or are they keeping a closer tab on it for other reasons?


Last week they wanted me to send them confirmation of insurance.  Earlier this morning I received this;


_Dear XXXX, 

I am currently in the process of reviewing your mortgage with National Irish Bank. Can you forward me a copy of your XXXXX life policy 101010101, I hold the policy details on file but I need the policy schedule. _

Are there any other NIB tracker customers out there getting the same?  Somethings up here?

EDIT - just rang them - apparently, just updating files due to branch closure and handover of docs to another branch...(was getting worried there for a minute!)


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## MandaC

serotoninsid said:


> Last week they wanted me to send them confirmation of insurance.  Earlier this morning I received this;
> 
> 
> _Dear XXXX,
> 
> I am currently in the process of reviewing your mortgage with National Irish Bank. Can you forward me a copy of your XXXXX life policy 101010101, I hold the policy details on file but I need the policy schedule. _
> 
> Are there any other NIB tracker customers out there getting the same?  Somethings up here?
> 
> EDIT - just rang them - apparently, just updating files due to branch closure and handover of docs to another branch...(was getting worried there for a minute!)



I think something is up with NIB that they have lost peoples information or something.  Firstly they kept writing to me for insurance details and then they rang me to say their interest was not noted on the life policy or something like that and would I ring the life people and get it sorted.  I told them I had given them all documentation which was passed before the money was released, but if they put their query in writing to me, I would look after it.  I never heard anything else.


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## Round Tuit

Jeez,
My Tracker is the only bit of luck I've had financially, and that wasn't really luck - just good research on my part here on AAM & off I went and switched. There used to be a first time buyers grant - I didn't get that as i bought just a little after it was discontinued. 
Then they introduced it that first time buyers didn't have to pay stamp duty on 2nd hand purchases - after I'd bought mine so I didn't catch that break either.... 
I live in a smaller place than I'd like, but I didn't over-borrow to get it. I've been able to maintain my payments despite 3 paycuts totalling 30%. It's been tough but even when the banks weren't bothering I did my own stress-testing. I don't think it's fair that I be punished being careful with my money when the banks and the Government weren't.


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## ajapale

*Topic Reminder: Will trackers be taxed at the next budget?*

Personally I cant see how this could be done in a  practical sense.

Would people on bad trackers (ECB + >1.25% say) be taxed more than people on better trackers (ECB + <1.00% say).

I would be inclined to file the suggestion under "Urban Myth".


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## Joe Q Public

Easy solution is to remove TRS from trackers.


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## Howitzer

Joe Q Public said:


> Easy solution is to remove TRS from trackers.


Again, somewhat ignores the issue of equity of taxation and also the practicalties of how TRS works - TRS is of more benefit to you the greater the amount of mortgage interest you pay. If you stop all Trackers being elgiable for TFS this would have the greatest impact on those with the worst Tracker deal. Those with the best Tracker would see very little impact.

Urban myth.


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## Joe Q Public

Equity of taxation eh? Pull the other one. The tax system is far from equitable.


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## Howitzer

I'm not really sure what you want me to say. You're ignoring the impracticalites involved. 

Are you just ranting and raving or do you have any real basis for what you're saying?


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## Joe Q Public

They can stop TRS at the stroke of a pen it they want. If they do it at all is a matter of debate. Even if it happens people with trackers will have to suck it up as equity of taxation will not be a bar to it happening.


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## Paulk

Howitzer said:


> Again, somewhat ignores the issue of equity of taxation and also the practicalties of how TRS works - TRS is of more benefit to you the greater the amount of mortgage interest you pay. If you stop all Trackers being elgiable for TFS this would have the greatest impact on those with the worst Tracker deal. Those with the best Tracker would see very little impact.
> 
> Urban myth.



+ 1

Good point Howitzer!

As I have said before on this thread, 				 			 			 		  		I'm not sure how realistic or profitable this would be for the Government as most tracker customers are no longer eligible for TRS anyway, since they secured their mortgage over 7 years ago. 

If the abolishment of TRS relief for tracker customers is to be introduced, it would only be people who took out a tracker mortgage over the last 7 years who would be penalised. Surely this in itself would be inequitable, as recent mortgage borrowers have more money to pay back, yet they would be the ones being punished?


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## Joe Q Public

Inequitable or not, there would not be lot you would be able to do about it.


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## PaddyW

If they pull the plug on the TRS, surely there is a lot of people who would not be able to keep up their payments. Would this not cost the government more in the long run?


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## Joe Q Public

Of course it would.


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## PaddyW

So why would they attempt to pull TRS then? Seems a backward step.


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## Howitzer

Joe Q Public said:


> Inequitable or not, there would not be lot you would be able to do about it.


You seem to be taking the view that because something is possible for the Govt to do and because there is nothing that you as an individual can do to stop them, then that is what they will do - irrespective of whether it makes sense.

By the same token they could apply a tax on all blue cows, or half eaten donuts.

Can you explain the logic and practicality of removing TRS from 1 specific mortage product, which itself contains varying levels - from maybe 0.35% to 3.5%?


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## diceyreilly

if you have an investment mortgage this would probably mean you would not be hit by removing TRS or am i getting this right.


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## DB74

What do mean by an "investment mortgage"?

If you mean a mortgage on an investment property then you will not be affected by any change to TRS - you have already been affected due to the 75% limit on claiming tax relief on the mortgage interest.


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