Written answers

Wednesday, 13 May 2009

9:00 pm

Photo of Willie PenroseWillie Penrose (Longford-Westmeath, Labour)
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Question 90: To ask the Minister for Finance if, in the wake of 7 April 2009 budget changes to mortgage interest relief, persons who have a mortgage for less than seven years are entitled to interest relief if they had received mortgage interest relief previously in relation to a different property in which the combined duration of their receipt of the relief exceeds seven years; and if he will make a statement on the matter. [18952/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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As I outlined in the recent Budget, with effect from 1st May 2009, mortgage interest relief is being limited so that the interest payable on a qualifying home loan qualifies for tax relief for the first seven years only of the life of that loan. A qualifying home loan is a loan used for the purchase, repair, development or improvement of an individual's principal private residence.

The seven-year restriction applies to the interest payable on existing and on new qualifying home loans by both first-time buyers and non first-time buyers.

Where a person sells one qualifying residence and buys another, the interest payable on the loan used to acquire the new residence qualifies for mortgage interest relief for the first seven tax years of the life of that loan subject to the normal conditions under which the relief is granted.

I would like to illustrate this by way of example. Take for instance a couple that bought their first family home in 1995 and sold it in 2006 and immediately purchased their present family home financed partly by the proceeds of the sale of the first home and partly by way of a loan. The interest payable on the loan obtained in 2006 qualifies for tax relief for each of the 7 tax years 2006 to 2012 notwithstanding that the couple may have received tax relief in the tax years 1995/96 to 2006 on the interest paid on the loan used to purchase their first family home.

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