Clare Daly (Dublin Fingal, Independent)
Link to this: Individually | In context | Oireachtas source

112. To ask the Minister for Finance if interest on home loans is tax deductible. [35335/17]

Paschal Donohoe (Dublin Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

With regard to owner occupiers, Section 244 of the Taxes Consolidation Act 1997 provides tax relief in respect of interest paid by an individual on a loan used for the purchase, repair, development or improvement of his or her sole or main residence or the sole or main residence of his or her civil partner, dependant relative or his or her former or separated spouse.  Tax relief is available in respect of interest paid on qualifying home loans taken out on or after 1 January 2004 and on or before 31 December 2012. Mortgage interest relief (MIR) has been abolished for homes purchased on or after 1 January 2013.  MIR is currently due to expire for the remaining recipients on 31 December 2017, however in Budget 2017 the Government confirmed its intention to extend MIR beyond the current end-date of December 2017 on a tapered basis to 2020, in line with the commitment in the Programme for Government.

The remaining recipients receive relief at a rate of between 15% and 30% of qualifying interest paid – the highest rate of 30% applies to first-time buyers who purchased between 2004 and 2008 when house prices were at their peak. A ceiling on qualifying interest applies of €10,000 per individual (€20,000 per couple) in the first seven years of the mortgage, and €3,000 per individual (€6,000 per couple) in subsequent years.

With regard to mortgage interest paid by landlords, the expenses that may be allowed as deductions against gross rent are specified in section 97 of the Taxes Consolidation Act 1997. Interest on loans used to purchase, improve or repair a property may be deducted, subject to the limitations set out below.

For residential properties, deductibility of mortgage interest is conditional on the registration of all tenancies with the Residential Tenancy Board (RTB). For the period 7 April 2009 to 31 December 2016, 75% of interest was deductible against rental income. Full 100% interest deductibility is being restored incrementally by 5 percentage points per year from 2017, with 80% deductible in 2017, and full deductibility scheduled to apply from 2021.

The Deputy may also be aware that in the Finance Act 2015, a new relief was introduced with effect from 1 January 2016 which increases to 100% the mortgage interest deduction where a landlord undertakes, for a period of at least three years, to provide accommodation to tenants in receipt of social housing supports and registers such undertakings with the Residential Tenancies Board within certain time limits. The additional relief (i.e. the difference between the standard deductibility rate set out above and 100%) in respect of the three-year period is available by way of a claim to Revenue after the end of the period.  Further information on this relief is available in section 97 of the Revenue Commissioners – Notes for Guidance – Taxes Consolidation Act 1997 – Finance Act 2015 Edition – Part 4 Principal Provisions Relating to the Schedule D Charge, which is available at www.revenue.ie/en/practitioner/law/notes-for-guidance/tca/part04.pdf.