First time buyers about to buy, should buy before year end

Brendan Burgess

Brendan Burgess

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This is not a recommendation that now is a good time to buy property.

However, if you are a first-time buyer and you are planning to buy in the near future, it is important to make sure that you close the deal before the 31 December 2011. Given that buyers have plenty of notice, I would imagine that it will apply only to people who have actually closed the sale and taken ownership of the property by the end of the year.

If you are buying this year, don't leave it to the last minute. There are all sorts of delays in closing sales e.g. problems with legal works, lenders not releasing cheques in time, the sellers not ready to close. As the difference is so huge, I imagine that there will be massive complaints in January next year.

The first-time buyer relief which is being eliminated at the end of the year is worth up to an additional €12,600 for a single person and up to an additional €25,200 for a married couple over 7 years.

First time buyers - single person
Year |1|2|3|4|5|6|7
max interest|10k|10k|10k|10k|10k|10k|10k
Relief|25%|25%|22.5%|22.5%|22.5%|20%|20%
Value|2,500|2,500|2,250|2,250|2,250|2,000|2,000
Total: €15,750

Non first time buyers - single
Each year is €3,000@15% or €450 x 7 years = €3,150

Extra relief for buying in 2011
€12,600
 
For a single person to get the maxium value of this, they would have to pay €10,000 interest which is a mortgage in the order of €200,000 @5% interest rates.

For a married person, they would need a mortgage of around €400,000.

They would also have to hold onto their house as their home for the full 7 years. If they sell it or rent it out, they would lose the relief.
 
Hi Shnaek

I am making a different point. If you are a first time buyer and you have decided to buy in the near future, you must do so by the end of the year.

If you have not decided to buy, then the decision is much more complicated.
A first time buyer buying a house for €200,000 will save around €12,000 or 6% over 7 years. So if you think house prices are going to increase, remain stable for even fall by up to 5%, then you should still buy.

If,however, you think that prices are going to fall by a further 25%, then you should not buy now.
 
I've been looking for confirmation on this issue as to when the deadline actually is for first time buyers. I was initially led to believe that December 31 2011 was the deadline but then I read an article in the Irish times which states that the deadline is actually June of this year.

There is also a note at the end of that indo article which suggests that June is the deadline as well, according to the new programme for government, which actually contradicts the main subject of the piece.

Brendan, do you have a different source that says this will still apply until the end of the year? I am a first time buyer so this is of particular interest to me.
 
johnmcp said:
I've been looking for confirmation on this issue as to when the deadline actually is for first time buyers. I was initially led to believe that December 31 2011 was the deadline but then I read an article in the Irish times which states that the deadline is actually June of this year.

There is also a note at the end of that indo article which suggests that June is the deadline as well, according to the new programme for government, which actually contradicts the main subject of the piece.

Brendan, do you have a different source that says this will still apply until the end of the year? I am a first time buyer so this is of particular interest to me.
Click to expand...

Check the Revenue link I put in my post.
The government announced this change earlier this week.

Brendan
 
Thanks Brendan, I wasn't sure if that page on the revenue was out of date or not.
 
On RTE the other day it said 'apparently' this june proposal is been left until end of the year. Is a definitive fact now? or is there a chance it could still be ended in June.?
 
Tax reliefs like this can lead to people borrowing more as they can afford more due to the tax relief.

Tax reliefs can and do change so I wouldn't be relying on any scheme a government puts in place.
 
Bronte said:
Tax reliefs like this can lead to people borrowing more as they can afford more due to the tax relief.

Tax reliefs can and do change so I wouldn't be relying on any scheme a government puts in place.
Click to expand...

Hi Bronte

One should not choose to buy a house because of the incentive of these tax reliefs.

But, if one has decided to buy a house, then one must get it done and dusted before the end of this year.

Brendan
 
Just a quick question I’m wondering can you help me out on.

I’m looking to buy my first house with my girlfriend and upon researching we recently discovered there is a tax relief for first time buyers but this incentive runs out in December. Luckily we are not necessarily in a forced position to buy by the end of the year as we are saving and effectively paying a mortgage through that.

So by not basing our buying decision solely on a tax relief. Do you think we should actively look to buy before December now or after December will the impact on the market price drop for first time buyers anyway? or will the government bring in another incentive?
 
Another incentive? Doesn't look like it, at least for FTBs today. While it may look like an incentive, we made all our calculations without taking TRS into account. What if it is reduced or even abolished altogether before it is due according to today's conditions? Some may think we are too cautious but I, and I suppose many others, had a bit of a scare a few weeks ago when there were talks about a complete abolition of the TRS from this coming June. Can anyone be 100% sure it is not going to happen in June 2012? We just thought of it as an extra, were we to avail of it. Now it doesn't look like we are going to buy any more, at least in the near future, because of all the rate increases this year and other personal circumstances...
 
Just a note on all this. It was reported on RTE on March 28th that interest relief for FTB's was not going to be abolished in June but rather the end of the year. Brian Hayes spoke last Friday to the Irish times still citing the June date as end date.
I emailed him and some others and was told that no definite decision was made on this and would be made in May. However the view is that it may be to tight time wise to end it in June.
Like a poster said above, even if it is the end of the year. They could abolish it altogether, instead of allowing those who have it now retain it for 7 years. Unfair, seeing as there are a lot of frugal saving people who held off buying would see this releif transferred to those who made bad decision, maybe borrowed to go on holidays etc not to mention this extra relief goes to those who dont even need it as it's a blanket increase.
 
Hi Brendan,

What about the fact that the interest relief should go up to 30% i.e.

"Increasing mortgage interest relief to 30% for First Time Buyers in 2004-08 (from the current sliding scale of 20% to 25% depending on the year the mortgage was taken out), financed in part by bringing forward the abolition of relief for new buyers from June 2011."

Should that not be re-calculated into your projections ??

Cheers
Jonny
 
I'm a first time buyer and I just got my mortgage application approved last week so I'm wondering when will they announce if the date is going to be June or Dec?

I'm currently looking at a house and trying to work out a few details with the builder but as the house wont be finished for another 2-3 months I had been hoping that I wouldn't have to draw down the mortgage for another 2 months so I could save more. Even If I go for the house now and try and rush it through I still mightn't make the deadline if it was June.

Any help or advice appreciated. Thanks.
 
Quick question, do you only get TRS once, as in when you get it the first time does the clock starts ticking for 7 years and that's it ?
 
Thanks Brendan. Can take my time working out the details now
 
Has it been announced recenly by the Governmnet that mortgage relief will be abolished in Dec? Never saw it in paper
 
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