quarterfloun said:
Simply my question is "Is there an optimum amount I should borrow to gain a tax break or am I barking up the wrong tree with this idea".
You are correct that there are tax breaks in relation to interest on money you borrow to purchase/construct your own home
If you are a FTB (first time buyer) you will be allowed to reclaim 20% of the first €4,000 (€2,540 for non-FTB) per person
That is the amount of interest on borrowins on roughly €129k (FTB) or €82k (using an int rate of 3.1%) per person
So a single person non-FTB will get no tax relief on interest of borrowings greater than €82k
So after these amounts above there is no tax benefit of investing your money in your home
But you must look at the cost of the borrowings
Since you would be paying interest at around 3.1% if you borrow, where would you invest your money so that you will earn more than 3.1% (or more than 2.48% of tax relieved interest) to warrant investing in something else
Rabordirect and Northen Bank are paying out around 2.4% (3% less DIRT) on deposit accounts which is very close considering the the little amount of risk involved
Borrowing on property as security is probably the lowest form of borrowing you are going to obtain so if you want to invest the money you have rather than tie it up, a mortgage would be the way to go
The tax breaks should not really effect your decision to a great extent but rather your personal attitude to investing/saving/living should be more important
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