Pat Deering (Carlow-Kilkenny, Fine Gael)
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154. To ask the Minister for Finance the position in relation to tax relief at source, TRS, ending in 2017; the other avenues of financial support open to persons (details supplied) who purchased their homes at the height of the property price boom and are still in negative equity; and if he will make a statement on the matter. [8334/17]

Michael Noonan (Limerick City, Fine Gael)
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The Deputy will be aware that there is a commitment in the Programme for a Partnership Government to retain mortgage interest relief (MIR) beyond the current end date on a tapered basis. As legislation currently provides for the relief to continue to end-December 2017, it was not necessary to include legislation in Finance Bill 2016 to provide for the tapered extension of the relief.  However in my Budget speech in October last I confirmed my intention to extend MIR beyond the current end date on a tapered basis to 2020 and that the details of the extension will be set out in Budget 2018.

Mortgage interest relief operates as a tax relief at source, meaning that the relief is deducted by the bank from the mortgage payment due, and the homeowner pays only the net amount due.  Therefore existing recipients of the relief face a "cliff" in 2018 when their monthly mortgage payments will increase when the tax relief at source is withdrawn (all other factors being equal). The purpose of the tapered extension is to avoid a sudden significant increase in mortgage repayments for those losing the relief, but instead to withdraw the relief gradually, allowing the mortgage holder time to adjust to the change in mortgage repayments.

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.

The Deputy will also be aware that, 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 compares favourably to the rates available to other remaining recipients of MIR which reduce on a gradual basis from 25% in years 1 and 2 of the mortgage to 15% in the 8th and subsequent years.

Single individuals and married couples / civil partners that are first-time buyers qualify for mortgage interest relief for the first seven years of their mortgage up to a maximum ceiling of €10,000 and €20,000 respectively. Thereafter relief is restricted to 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. First-time buyers who purchased between 2004 and 2008 when the property market was at its peak also receive an enhanced rate of relief.  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 works to reduce the relief available in a gradual manner.