Tuesday, 21 February 2012
Department of Finance
Denis Naughten (Roscommon-South Leitrim, Independent)
Question 170: To ask the Minister for Finance when the mortgage interest relief measures for those who were first-time buyers between 2004 to 2008 announced in budget 2012 will come into effect; and if he will make a statement on the matter. [9529/12]
Michael Noonan (Minister, Department of Finance; Limerick City, Fine Gael)
As announced in the Budget, the proposed new 30% rate of tax relief in respect of interest paid on qualifying homes for first time buyers who took out their first qualifying home loan in the period between 2004 and 2008, both dates inclusive, comes into effect as regards the 2012 tax year and subsequent tax years. As with many of the reliefs announced in the Budget, this comes into effect when the Finance Bill is enacted. I should point out that mortgage interest tax relief, including the proposed new 30% rate of relief, in respect of interest paid on qualifying home loans is given by qualifying lending agencies, including local authorities, through the tax relief at source (TRS) system. This requires the various lending agencies to make the adjustments in their computer systems.
In advance of the passing of the Finance Act, I am informed by the Revenue Commissioners that they have been in ongoing contact with all qualifying lenders, some 132 in total, to ensure that the necessary software changes to the lenders’ tax relief at source (TRS) systems are made to cater for the new 30% rate of tax relief so that, when the Finance Bill is passed into law, the relief, which will be retrospective to 1 January 2012, can be passed onto the borrowers by qualifying lenders without undue delay. The speed with which the software changes can be developed and implemented by lenders may vary from lender to lender. Revenue is currently engaging with all of the lenders in arranging to have the new rate tested and implemented as soon as possible.
As an interim relieving measure Revenue has already informed lenders that they may grant tax relief at an existing rate of 25% to those who will be entitled to the 30% rate of relief. When the necessary software necessary to implement the 30% rate of tax relief is in place, the lenders will grant the additional 5% relief retrospectively. The reason the 25% rate can apply now is simply because that rate is already in the software systems as part of the existing first time buyer tax relief regime.