Jim Daly (Cork South West, Fine Gael)
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196. To ask the Minister for Finance if he is considering any changes to enhance the current mortgage interest relief scheme in the upcoming budget; and if he will make a statement on the matter. [20732/16]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that in the Programme for a Partnership Government there is a commitment to retain mortgage interest relief beyond the current end date on a tapered basis.  Mortgage interest relief is currently scheduled to expire at the end of 2017 and I will consider options for its retention, as set out in the Programme for Government in due course.

At present, Section 244 of the Taxes Consolidation Act 1997 provides for tax relief in respect of interest paid on qualifying home loans taken out on or after 1 January 2004 and on or before 31 December 2012, with relief being available until 31 December 2017.  Mortgage interest relief has been abolished for homes purchased since 1 January 2013.

On foot of a change I introduced in Budget 2012, first time buyers who bought at the height of the property boom between 2004 and 2008 receive a rate of mortgage interest relief of 30%. This 30% rate continues to apply to these first-time buyers up until the end of 2017. In the absence of this change the mortgage interest relief available for these individuals would have gradually reduced to a rate of 15%.

Single individuals, married couples and civil partners that are first-time buyers, qualify for mortgage interest relief for the first seven years of their mortgage up to a maximum annual interest ceiling of €10,000 and €20,000 respectively. Thereafter relief is restricted to interest ceilings of €3,000 and €6,000 respectively. 

The system of mortgage interest relief is designed and targeted in such a way that the relief is of greater value in the early years of a qualifying loan where the interest represents a greater proportion of the repayment.  Mortgage interest relief is of lesser value to individuals whose repayments are made up of a higher proportion of principal than interest, as would generally be the case for those who move in to the eighth and subsequent years of their loans. It is worth noting that the application of the ceilings already work to reduce the relief available in a gradual manner. In addition, as the amount of interest payable reduces as a mortgage is paid down, the level of mortgage interest relief also reduces in tandem.