Maximizing TRS : Mortgage Interest Relief

[BillyPiper]

Hi there,

So a thought just popped into my head. Am I maximizing TRS or mortgage interest relief? And is there any actions I can carry out to maximize the mortgage interest relief available to me ?

Here is my situation. I bought an apartment in October 2007 for 225,000 with variable rate over 35 years (stupidly instead of tracker which is a different story) with the EBS. Currently my mortgage rate is 4.33%.

My mortgage repayments at this rate are 769 euro per month currently.
I do not know how much of this is TRS per month, but when it kicks in should be getting 30% TRS relief with new budget.

The relief to me currently is based on 10,000 ceiling (single with revenue) and 20% (think this was old rate before change to 30% for 2004 -2008 buyers). At current rate of TRS in 2011 I payed 9,670 euro in interest last year to EBS (NB: It is only interest payed to bank that you get relief on. NOT CAPITAL).

At 9,370 I am near the 10,000 ceiling so thats good in the way that i have been nearly maximizing to date (not even realizing it but can still avail of more TRS.

BUT NOW with TRS going to 30% relief it is more relevant to maximize. So should I pay off more mortgage to avail of max 10,000 limit ??
Does anyone know calculator / calculations on how to maximize TRS that exists out there??

HOWEVER MORE IMPORTANTLY !!!!

I got married last year and have not informed revenue yet. So the ceiling goes up to 20,000 in interest per year !!! MY QUESTION IS SHOULD I PAY OFF MORE OF MY VARIABLE MORTGAGE (e.g. double) TO ENSURE THAT I pay closer to the 20,000 in interest a year and then ensure I maximize the 30% relief available to me ? I am in position to do that fortunately.

Has anyone thought of or dealt with this in a similar situation ?

Thank you very much for your help

Cheers,
Billy

 

[BillyPiper]

you can see the table comparisons for single or married person and first time buyer@
http://www.revenue.ie/en/tax/it/reliefs/tax-relief-source-mortgage-rates.html

Obviously these are specifics to me case but any general guidance would be great

Thank you

 

[Leaky1]

MY QUESTION IS SHOULD I PAY OFF MORE OF MY VARIABLE MORTGAGE (e.g. double) TO ENSURE THAT I pay closer to the 20,000 in interest a year and then ensure I maximize the 30% relief available to me ?

Maybe I have misunderstood - you want to pay more interest so you can get tax relief on it?

The interest rate you are charged is set by the bank (in this case 4.3%). If you pay off more of your variable rate mortgage (e.g. double) the additional amounts you pay will be set against the capital outstanding. Actually if you pay extra amounts against the capital you will be reducing the interest you are charged because there will be less mortgage left to pay! Which is a good thing in my opinion.

 

[BillyPiper]

Hi Leaky,

so if i pay more it means only off the capital ? and not part capital, part interest on the increase ??

What about if I moved to an interest ONLY mortgage ?
Would that increase interest payments and therefore increase relief ?

Maybe i have this all wrong and am completely open to clarification

Thanks a mill
Billy

 

[vandriver]

On interest only,you would pay just the interest element of your current mortgage.You can't increase the interest element of your mortgage without either (a) paying a higher interest rate and/or (b) having a larger capital amount outstanding.