Mortgage holders seeking new tax relief must file tax return to Revenue

Mortgage holders wishing to claim the new once-off relief on mortgage interest will have to file a tax return to the Revenue Commissioners and provide the required information to qualify for the new measure. It will operate as a tax credit which will reduce their tax liability for this year.

The detail of the new relief, due to apply on a once-off basis, were included in the Finance Bill, published on Thursday, It will be available to those with an outstanding mortgage balance between €80,000 and €500,000. The relief will be available at the standard 20 per cent rate of income tax in respect of the increased amount of interest paid on the mortgage in 2023, compared to 2022. The maximum relief which can be claimed is €1,250. Pro-rating of the relief will apply where the interest paid in either or both years was for less than 12 months.

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The Bill, which gives effect to measures contained in Budget 2024, also includes full details of the new tax credit for landlords, which applies to individual landlords of private rented accommodation that is registered with the Residential Tenancies Board (RTB). The relief will reduce the tax due on rented residential income by up to €600 in 2024, €800 in 2025, and €1,000 in 2026 and 2027. The relief is capped at the tax liability on the rental income.

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To avail of the relief the property must be rented or actively marketed for rent at the end of the year in respect of which the claim is made, Eligibility depends on the landlord complying with Local Property Tax and RTB registration requirements.

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Where a property is owned by more than one landlord relief will be apportioned based on the rents returned by each one of them. The relief will be clawed back where, within four years of the start of the first year in which relief was claimed, any of the landlords’ qualifying residential properties are disposed of or otherwise removed from the rental market, Relief is not available where the property is rented to connected parties such as relatives.

The Bill also extends the Help-to-Buy scheme to the end of 2025 and changes the rules in relation to those also availing of the Local Authority Affordable Purchase Scheme. It confirms the increase in the rental tax credit from €500 to €750 and from €1,000 to €1,500 for jointly-assessed taxpayers.

It also extends the relief to parents paying for their student children’s student accommodation in the case of Rent-a-Room accommodation or “digs”.