TRS - you are only a first time buyer for 7 years

C

corklad

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I was doing up some TRS calculations for my mortgage this morning and came across something I didn't realise. I rang the TRS helpline to clarify and they said a lot of people have the same misconception.

The fact is this: you are only a first time buyer for 7 years for TRS.

So in my case, I bought in 2007 as a married couple so I only get 30% relief on €20,000 from 2007-2013 and in 2014-2017 I get 30% on €6,000. (10k versus 6k for a single person obviously).

I had my calculations done on the fact that it was 20k all the way up to 2017

The charts are here:
http://www.revenue.ie/en/tax/it/reliefs/tax-relief-source-mortgage-rates.html
 
I saw this yesterday. Its not so bad for us actually, from 2014 the 6k ceiling at 30% is roughly equivalent to 20% with the 20k ceiling, our annual interest would be approx 9k, nowhere near that 20k ceiling.
 
We've a whopper 400k mortgage on a crappy interest rate with PTSB so we'd be touching around 16k interest at the moment. Miscalculating reality hurts sometimes.
 
Awwwhh that is crap! My interest payments on €300K mortgage from PTSB are €16,000

I bought in March 2005 - does that mean my €20,000 ceiling ends at the end of 2012? or March 2013?

Also am I calculating this right?
- 2012 interest €16,000 @ 30% relief is €4,800 per year or €400 per month.
- 2013 interest €6,000 @ 30% relief is €1,800 per year or €150 per month.

That is sooooo disappointing!
 
On the same topic. If within that same 7 years you sell and buy again, are you still treated as a first time buyer for mortgage interest relief purposes?

I heard this mentioned elsewhere, but it sounds like a stretch to me.

Thanks.
 

Just realised I can't even add! Our 7 years is up at the end of 2011 - this means the new rate in Jan for us will be €150
 

My understanding - please feel free to point out errors.

In Budget 2012 a special rate of 30% for the tax years 2012 to 2017 was introduced for first-time buyers who took out mortgages in the boom years of 2004 to 2008.

This sounds great and first time buyers (FTB) should be happy but remember you are only a FTB for the first 7 years after you buy so the relief may not be as valuable as you think.

Let me explain.

Single First time Buyer:

You bought in 2006. You will be classed as a first time buyer from 2006-2012 only. Why is this important?

For the first 7 years as a first time buyer you are entitled to relief on the first €10,000 interest payable on your mortgage. After 7 years you will be classed as a non first time buyer and will get relief on the first €3,000 only.

The new rule entitles you to 30% relief from 2012 to 2017.

Remember you are only classed as a first time buyer until 2013.

Therefore

2012 : 30% of first €10,000 (€3000)
2013-2017 : Now a non first time buyer so you are entitled to 30% of €3,000 (€900)

An example should make it easier to understand:

Mortgage of €300,000. Interest rate of 4%. Interest payable = €12,000

2012 : Tax relief = 30% x €10,0000 (max) = €3000
2013 - 2017: Tax relief = 30% x €3,000 (max) = €900

Married First time Buyer:

You bought in 2008. You will be classed as a first time buyer from 2008-2014 only. Why is this important?

For the first 7 years as a first time buyer you are entitled to relief on the first €20,000 interest payable on your mortgage. After 7 years you will be classed as a non first time buyer and will get relief on the first €6,000 only.

The new rule entitles you to 30% relief from 2012 to 2017.

Remember you are only classed as a first time buyer until 2015.

Therefore

2012 : 30% of first €20,000 (€6000)
2013 : 30% of first €20,000 (€6000)
2014 : 30% of first €20,000 (€6000)
2015-2017 : Now a non first time buyer so you are entitled to 30% of €6,000 (€1800)

Mortgage of €300,000. Interest rate of 4%. Interest payable = €12,000

2012, 2013, 2014 : Tax relief = 30% x €12,000 (max) = €3600
2015 - 2017: Tax relief = 30% x €6,000 (max) = € 1800

Conclusion:

The misconception is that FTBs will get 30% relief as a first time buyer for the years 2012-2017 if they bought in 2004-2008.

The truth is they will get 30% relief as a first time buyer for the first 7 years after they bought, after that they will get 30% relief at non first time buyer rates.

If you bought in 2004,2005 you are no longer a first time buyer so you will only get 30% relief at the non first time buyer rate.

Again, not to be sniffed at but not as valuable as people think.

www.moneybackmortgages.ie
 
matc66 said:
How do you figure a non-FTB still gets a rate of 30%?
Click to expand...

From the budget:

Exception
However, notwithstanding the rates of tax relief mentioned above, for individuals who purchased their first principal private residence on or after 1 January 2004 and on or before 31 December 2008, the rate of tax relief on the interest paid on the loan to purchase that property will, for the tax years 2012 to 2017, be 30%.
 
I'm sorry if this is a little off to a tangent, but I'm totally confused about the tax relief and rang the TRS helpline this morning who were of very little help. They made a mess of our relief for years as they had not noted my other half as a first-time buyer when in fact we both were, we did get a good rebate last year which was a nice windfall (though I'm nonethewiser as to how they calculated it and don't think they went back the full way only the few recent years) but I find it hard to work out if they're doing it correctly now and whether they will going forward. We bought first house in 2004, (both first time buyers) sold that, and bought second house in 2007 and our relief at the moment is €75 in total for us both per month, which I'm told is the maximum anyone in our situation should get, we are married but assessed separately don't think this makes a difference? Would anyone be able to tell me if this would seem correct? Thanks......
 
Hi Newo,

That does sound right for a married couple. Basically, because you are claiming on a second property (ie no longer a first time-buyer), you can only claim up to a maximum of 15% of €6000 (€6000 being the maximum for a married couple). €6000 x 15% is €900 for the year, and worked out over 12 months is €75 a month.
 

Great - thanks Jo
 
Does anyone know what happens if you close the account the TRS was being paid into?
I closed the account as it was clocking up ridiculous fees and I have not set up a new direct debit for the Mortagage as I am paying what I can when i have it.

Where will my TRS refund go?
 
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