Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

Senator Gavan is requesting a report on the introduction of mortgage interest relief for principal private residences. The relief proposed by the Senator would be equivalent to 30% of the difference in interest paid in the relevant month relative to the interest rate charged in 2022, capped at a maximum benefit of €1,500 per household for the duration of the scheme or for a period of 12 months, whichever is the lesser. It is also proposed that the relief would be applied at source. However, it is not clear when the taxpayer would actually receive the benefit and to which year the relief would relate. For example, if relief were applied at source, the earliest the monetary benefit could arise would appear to be from January 2024, when relief is applied at source in respect of the mortgage payment for that month.

The Government is acutely conscious of the impact of rising interest rates and mortgage costs on many taxpayers. For this reason, as part of the budget, I announced a temporary one-year mortgage interest tax relief. As I have stated many times, it is not possible or desirable for the Government to alleviate the full impact of increased interest rates on all mortgage holders. However, the measure I am introducing is temporary and targeted and will go some way towards supporting those householders who have experienced increases in their mortgage costs associated with the recent increase in interest rates.

It is expected that Revenue will be in a position to start processing claims for mortgage interest tax relief in January 2024. As part of the design feature for this tax relief, I explored the feasibility of administering the relief at source, given this was a feature of the previous version of mortgage interest relief. However, I was advised by Revenue that the IT infrastructure used for the previous version of mortgage interest relief has been discontinued and could not be used for the purposes of the new relief being introduced on 1 January 2024. In addition, to scope, design, build and test a new system would be very complex and would come with a large monetary and opportunity cost for Revenue. It would also involve significant engagement with the financial institutions and other entities and would require linking any new Revenue system with their internal systems. This process would also likely require separate IT developments and associated costs by the financial institutions.

These significant tasks could not be delivered within the limited timeframe of 1 January 2024. A key priority for me is to ensure the tax relief can be claimed by households at the earliest possible opportunity. Therefore, the more effective and immediate solution is to administer the relief via a tax credit. Furthermore, I am confident that the design of the tax relief is appropriately calibrated to ensure it provides households most impacted by the interest rate increases with sufficient support while also considering the broader Exchequer implications.On the basis that I am introducing a temporary one-off mortgage interest tax relief as part of this finance Bill and it is anticipated that claims can be submitted early next year, I do not believe a report along the lines requested by the Senator is necessary or warranted at this time. For that reason, I cannot accept this recommendation.