Your queries answered
Q: We are trying to make the cut-off for first-time buyers’ “mortgage interest relief”. It may be possible to get the funds drawn down before Christmas. But the solicitor will probably not be able to facilitate signing of contracts and transfer of money to the sellers’ solicitor until very early January (due to Christmas week). Will this mean we will miss out on the relief? How do Revenue know on which date the money transferred to the sellers?
A: Given the deadline, you are in a similar situation to many first time buyers who are trying to complete the purchase of their property in order to avail of the mortgage interest rate relief which will end on December 31st, 2012.
It is not clear from your question as to how far down the purchasing process you are. It would be normal that once your solicitor is happy with the contract and title documents, you can sign the contracts and return them to the vendors’ solicitor in order that their client can do the same.
At this stage a completion date will be agreed between the two solicitors. Depending on the amount you are borrowing in terms of the loan to value, when you sign the contracts, your solicitor will requisition sufficient funds from your lender to pay 10 per cent of the purchase price on exchange of contracts. Alternatively this may be paid from cash reserves by you.
Once contracts are exchanged there is still a considerable amount of legal work to be completed, all of which does take time.
Frankly I do not know how Revenue may or may not know when the funds were drawn down. My advice is to consult with your solicitor to ensure s/he is fully aware that as first time buyers you are trying to close the sale ahead of the December deadline and for them to convey this to their counter-part. This might help to speed the process along but only marginally. If you have not signed a contract yet, I feel it will be impossible to complete on the sale before to Christmas.
Gerard O’Toole is a Chartered Surveyor, scsi.ie
Q: I bought my house in 2005 and benefited from the extension in mortgage interest relief up to 2016 or 2017 introduced last year. Is this now gone after the Budget, or is it just gone for people who purchase in 2013, who will benefit from not having to pay Property Tax for a couple of years? There seems to be a lot of confusion out there, with people who think they will lose their relief and also face a property tax.
A: If the property is your only home, and you live there full time, the significant Stamp Duty changes were in last year’s budget and, as you say, you benefit from increased mortgage interest relief until 2017. This did not change the Budget. But new mortgages taken out after December 31st will no longer qualify for Mortgage Interest Relief.
The new property tax starts on July 1st, 2013, so only a half payment will be needed next year. The same exemptions will apply to the new property tax as now applies to the household charge (eg category 3 and 4 unfinished estates), with two additions providing exemption until 2016 – for new homes bought from 2013 to 2016, and second-hand homes bought by a first-time buyer in 2013.
What this means for you is that you continue to avail of the MIR benefit until 2017, but you will be liable for property tax. I would be very surprised if any changes from this will be introduced in the next Finance Act.
Edward Carey is chair of the Residential Property Professional Group of the Society of Chartered Surveyors Ireland, scsi.ie