Michael McGrath (Cork South Central, Fianna Fail)
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As the Deputy will be aware, Finance Act 2023 introduced the temporary one-year Mortgage Interest Tax Relief that I announced on Budget day.

Mortgage Interest Tax Relief will be available to taxpayers in respect of their principal private residence in the State where the outstanding mortgage balance was between €80,000 and €500,000 as of 31 December 2022, and the taxpayer is compliant with Local Property Tax requirements. The relief also extends to a qualifying property located in the State, which is the sole or main residence of the individual’s former or separated spouse or civil partner or a dependent relative.

The tax relief will be available at the standard rate of income tax and is based on the increase in interest paid in 2023 over interest paid in 2022. The value of the relief will be equal to the lesser of 20 per cent of this excess interest figure, or €1,250. This means that the maximum tax credit will be €1,250 per property.

Where the interest payments made in respect of either the 2022 or 2023 tax years are not for a full year, pro-rating of the relief will apply, to ensure interest is applied on a period of equivalence basis and that the cap is adjusted accordingly. Revenue’s systems will carry out the calculation of the relief at the point of claim.

A taxpayer will be able to make a claim to Revenue for this tax relief by filing a 2023 Income Tax Return. Revenue provides a free and easy to use facility to file an Income Tax Return for all taxpayers. For PAYE taxpayers this is done through myAccount, with self-assessed taxpayers using ROS.

The taxpayer will be required to submit the following documents at the time the claim is made:

• Certificate of Mortgage Interest 2022,
• Certificate of Mortgage Interest 2023, and
• Confirmation of mortgage balance at 31 December 2022.

It should be noted that based on Revenue data, the number of PAYE taxpayers filing an Income Tax Return to avail of the extensive range of tax credits, reliefs and deductions is consistently high year-on-year. For example, for the 2022 tax year over one million Income Tax Returns were filed by PAYE taxpayers, which resulted in refunds in excess of €708 million issuing. It should also be noted that PAYE taxpayers have four years to make a claim for a credit, relief or deduction so they may make a claim in respect of the 2023 tax year up to 31 December 2027.

Detailed guidance material regarding this credit, including the claims process is set out in Revenue’s Tax and Duty Manual Part 15-01-01B available at:

www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-15/15-01-11B.pdf

I would also point out that as part of the design feature for this tax relief, I did explore the feasibility of administering the relief at source given that it was a feature of the previous version of Mortgage Interest Relief. However, Revenue advised that the IT infrastructure that was used for the previous version of Mortgage Interest Relief had been discontinued and could not be used for the purposes of the new relief being introduced on 1 January 2024. In addition, to scope, design, build and test a new system would be very complex and come with a large monetary cost and it would not be feasible to deliver such a system by January 2024.

A key priority for the Government was to ensure that the tax relief could be claimed by taxpayers at the earliest possible opportunity. Therefore, the more effective and immediate solution was to administer the relief via a tax credit.