Mortgage interest relief - FTB

H

hjrdee

Registered User
Messages
160
Got the following from OASIS:

Mortgage interest relief is given at the standard rate of 20%. The relief is subject to upper limits, depending on your personal situation. The following are the maximum amounts allowable for 2006. (To calculate what this is worth to you each year after tax, you multiply the tax credit amounts below by 20%.) The higher limits for first-time buyers, apply for the tax year in which the mortgage is taken out plus six subsequent tax years.

If I take out my mortgage in November 2006, I get higher Mortgage Interest Relief for 2006 and six subsequent tax years, i.e. 2007-2012.

However if I take out my Mortgage in January 2007 I get higher Mortgage Interest Relief for 2007 and six subsequent tax years, i.e. 2008-2013.

Am I correct in thinking that if I leave my mortgage until January I get an extra year at the higher limit, for the sake of waiting 2 months for my mortgage?

Not a big deal but an interesting quirk I think nonetheless.
 
As far as I know you get the full tax year's worth of mortgage interest relief regardless of when you start the mortgage during the year. For example if you started the mortgage in December then you could get interest relief at source for the December payment and Revenue would refund you the 11 months of backdated relief (via your lender as far as I know). For a single FTB mortgage holder this would be a lump sum of 11 months x €66.67 = €733.33. There have been other posts here recently from people starting their morgtgages in July 2006 and who wondered why they were getting a lump sum refund from Revenue of 6 x €66.67 = €400 (or €800 for joint FTB mortgage holders).
 
I think Clubman might only be partially correct?

In my case at any rate, rather than getting a lump sum back when we started we've been getting higher relief every month.

So joint mortgage => relief on 8,000 at 20% for the year = 1600, or 133.33 a month if it was a full year.
As it stands, because we started repayments in May we're getting 1600/7 = 228.57 a month.

I assume if you didn't have mortgage repayments of 8,000 in that year then you would only get relief on 20% of what you payed that year? Although if Clubman is right I stand corrected!!!

If I am correct then the original poster would seem to be correct that you could lose out slightly by starting near the end of the year.

I'm most likely wrong! :)
 
beecee said:
I assume if you didn't have mortgage repayments of 8,000 in that year then you would only get relief on 20% of what you payed that year?
Click to expand...
It's not the mortgage repayment amount but the interest portion that matters here. You are getting tax relief on the interest not on the overall repayment. If an individual pays less than €4K interest in the year then they only get 20% relief on whatever interest they do pay.

Maybe Revenue apportion the total relief for the year over the number of months of repayments where the mortgage is started mid year rather than giving a backdated lump sum. It's just that a few recent posts suggested that some people were getting backdated lump sums when they started their mortgages mid year. At least two people mentioned getting a lump sum (via their lender I presume) of €800 for mortgages started in July.
If I am correct then the original poster would seem to be correct that you could lose out slightly by starting near the end of the year.
Click to expand...
I'm fairly sure but not certain that you are wrong.
 
Hi Clubman,

I never thought about it just being relief on the interest (although it's pretty damn obvious when you look at what it's called!!! :eek: )

I'm sure you're right about people getting lump sums... Do they get that lump sum and continue to get relief from then on? Does that not mean they could be getting relief on interest they haven't paid?!?

So if you start your mortgage in December, and the interest payable in that month is 2000 (to pick a random amnt), will you get a lump sum of 133*11 for the previous 11 months, as well as 133 for that month? (assuming a joint mortgage).

That means if you pay off the mortgage in january the next (highly improbable, I know!) surely you've taken the Revenue for a ride?!

Alternatively, the original poster observation would seem to be correct. (i.e. that by not reaching the 4000/8000 interest in the first year of the 7 available, you miss out on some of the available tax relief)

Something seem awry? (Probably my logic again! :) )
 
beecee said:
I'm sure you're right about people getting lump sums... Do they get that lump sum and continue to get relief from then on? Does that not mean they could be getting relief on interest they haven't paid?!?
Click to expand...
Good point - and perhaps an indication that I am wrong! Obviously you don't get mortgage interest relief on interest that you have not paid. I guess that you get the full year's worth of relief in year one if for the part year your interest bill will be at least the threshold amount (e.g. €4K for a sole FTB). For people starting in, say, July this is quite possible. For those starting later in the year perhaps not. But if this is the case the late starter does not lose out since while they do not get additional relief neither do they pay the interest in the first place! I think I'm confusing myself now... :eek:
 
ClubMan said:
. For those starting later in the year perhaps not. But if this is the case the late starter does not lose out since while they do not get additional relief neither do they pay the interest in the first place! I think I'm confusing myself now... :eek:
Click to expand...

But would they not lose out on the higher threshold amount for an extra year?
 
If you start your mortgage in November, and happen to pay 2000 interest each month, then yes, you would get the full year's tax relief of 800 euro squeezed into 2 months. You would get TRS refunds of 400 per month.

But, next year you would get 800/12 = 66.67 TRS refund per month.
 
You must log in or register to reply here.
Back
Top