Interest relief for boom years buyers


MORTGAGE ARREARS:THE MORTGAGE interest relief programme outlined yesterday for certain homeowners who bought at the height of the boom will see some couples better off by up to €2,000 this year while a single person who meets the criteria will have €1,000 extra.

The rate of interest relief being made available to first-time buyers who took out their first mortgage between 2004 and 2008 is to increase to 30 per cent from 15 per cent, as long as they are owner-occupiers.

Individuals who took out loans in 2004 as first-time buyers will see a maximum gain of €450 per year, while couples who bought in the same year will benefit by €900. The changes will bring their total maximum relief to €900 and €1,800 respectively.

The benefit for those who bought in 2004 is relatively small, because of a rule which says people can only be considered first-time buyers for seven years, so those who bought in 2004 now get relief at non-first-time buyer rates, which have a ceiling of €3,000.

First-time buyers who took out loans in 2007 will gain most from the changes although they are the ones who paid the most for their properties. They will benefit by up to €1,000 for singles and €2,000 for couples in 2012 and 2013. This will take their total maximum relief in 2012 and 2013 to €3,000 and €6,000 respectively.

These mortgage holders will receive relief on the increased ceilings for first-time buyers in 2012 and 2013 of €10,000 or €20,000. In 2014 they will be entitled to the increased rate of relief on non-first-time buyer ceilings under the seven-year rule.

The Bill also clarified that first-time buyers who bought in 2008 but did not start paying interest until the following year will also qualify for the enhanced relief. A provision contained in the Bill says mortgage holders qualify for the increased rate of relief if they made their first mortgage interest payment in the period between 2004 and 2008 or drew down their mortgage in the same period.

The Minister for Finance also confirmed the Government’s intention to try and kick-start the moribund property market through enhanced tax-relief for people who buy houses. First-time buyers who buy in 2012 will get tax relief of 25 per cent and the rate will remain the same in 2013 before falling to 22.5 per cent for 2014-2016, on the same ceilings. In 2017 it will drop further to 20 per cent.

People who buy a second or subsequent home this year will benefit from a 15 per cent rate of mortgage interest relief. The relief will be scrapped in 2013.

Fianna Fáil’s Michael McGrath said while the measures would be welcomed by some “people who bought before 2004 and those who bought their second or subsequent homes between 2009 and 2011 have been given nothing by the Minister.”