Thursday, 17 December 2020
Department of Finance
Mortgage Interest Relief
308. To ask the Minister for Finance if mortgage interest relief for all active housing is to be abolished at the end of 2020; the breakdown by county of the number of mortgage holders this will affect; and if he will make a statement on the matter. [44586/20]
A limited form of Income Tax relief is available to certain taxpayers for interest payments on a qualifying mortgage loans, as set out in section 244 of the Taxes Consolidation Act, 1997.
The relief has expired for mortgages taken out prior to 2004 and ceased for new borrowings from January 2013.
The residual Mortgage Interest Relief is therefore only available on qualifying mortgage loans taken out between 2004 and 2012 and has been phased out for the remaining recipients on a tapered basis to alleviate the potential financial difficulties of the ‘cliff’ that may arise if the relief was removed in a single year.
The “current rate” in 2020 is 25% of the 5 rates that applied in 2017 which were 15%, 20%, 22.5%, 25% and 30% with the application of these rates depending on an individual’s circumstances. The rate of relief was reduced to 25% of the 2017 relief in 2020 and will cease from 1 January in 2021, as legislated for in Finance Act 2017.
The decision to abolish Mortgage Interest Relief was prompted by the view that relief effectively becomes priced-in to the purchase price of the property. Research by the ESRI contends that demand-side oriented tax incentives that target home buyers, such as Mortgage Interest Relief, are likely to result in increased house prices with a limited increase in supply and thus the home purchaser is unlikely to end up as a net beneficiary.
Based on current data, the number of mortgage accounts that will no longer be in receipt of the relief from 1 January 2021 will be 225,532. The breakdown by county is as follows:
Mortgage Accounts in receipt of Mortgage Interest Relief by County