Mortgage repayments

Hi Can someone explain to me the tax relief on mortgage repayments. Are repayments made before or after tax?

If after tax, than is the max relief €66 per month on monthly mortgage repayments?

The tax relief for a single person buying their first home is calculated as the interest x 20% (regardless of what rate of income tax they pay) subject to a maximum of €4,000 per year.

So someone who's paying €4,000 a year interest or more will have their relief calculated at €4,000 x 20% /12 = €66 per month.

A married couple or two single people buying together get twice as much. This rate is for First Time Buyers only.

For second or subsequent time buyers, the ceiling is lower at €2,540 per person.

Liam D Ferguson
www.yourfirstcastle.com

"Can someone explain to me the tax relief on mortgage repayments. Are repayments made before or after tax?"

Rediculously, both systems are in use! It depends on which mortgage lender you are with. One does not get a tax-relief on mortgage Interest anymore. A new system called TRS applies to Mortgage Interest on home loans. The TRS (Tax Relief at Source) is a credit. As its name suggests it is supposed to be at source. Lenders who are, or were, building societies, apply the TRS credit at source. These include EBS, Irish Nationwide, Permanent tsb (previously Ir. Permanent Building Society) and First Active (previously First National Building Society). The lender will advise you of the gross payment less the TRS to arrive at the Net Payment you need to pay. They will diduct the Net Payment from your account. The 'Clearing Banks', including ICS Building Society (owned by Bank of Ireland) requested abstention from the 'at source' rule. They deduct from your account the higher gross amount and then re-imburse you with the TRS Credit to your bank account. In some cases they are crediting the account of a person who used to pay the mortgage even though the other party to the mortgage now pays the mortgage.

THE TRS is not a tax Credit. It is a credit on the home loan. A person who's circumstances have changed is in receipt of a Social Welfare may also get the TRS credit.

I filled out my TRS form a few months back. Should I receive something back from the bank or the Revenue Commisioners saying they received it?
Sorry the ignorance but not too sure if the TRS is being deducted.

Thanks

Hi, If it has been done, you should notice the Tax Relief as a deposit into your bank account every month, the same day your mortgage payment comes out., it not contact 1890463626, quoting your RSI number.

Thanks for that. There are no deposits to our account from which the mortgage comes out of. Does this mean they haven't received the forms? How long does it take for the TRS to be processed. We filled ours out the last week in May.

I believe its taking upwards of 3 months for the Revenue to apply the reliefs given volumes of requests received, however do call them to ensure you TRS form has actually been received, they can go missing

Deirdre Leonard
leonard@rea.ie

Hi All,
I am sharing a mortgage with one other person (family member). I am wondering how does Mortgage relief work in this case

Basically she applied for it at the start, and has been getting it since then, however I've only recently applied for mine.

Now that we're both claiming Relief, how does it work. Say for example if she is getting 80 per month, do I get half of that, or do I get a similar amount. Also , can this be backdated?

(sorry to sound so clueless, but I am , frankly )

You can backdate your claim for outstanding relief by up to 4 tax years (i.e. back as far 2004 right now).

If you are both first time buyers then you can claim 20% relief on a maximum of 2 x €10K (was 2 x €8K last year) of interest. For example if the annual interest bill was greater than €20K then you would jointly get relief of €20K @ 20% = €4K p.a. or €333.33 p.m. so your repayment would be reduced by this amount. If the annual interest bill was less than €20K then you get relief on the the lower amount actually paid.

Post the details of your mortgage (e.g. original and outstanding amount and term, start date, rate) and people can comment in more detail.