Mortgage Interest Relief Scheme: How to Claim?
Applications for the Mortgage Interest Relief Scheme may have ended in December 2020, but those taking part in the programme still have plenty of questions. Homeowners who are renting their property will want to learn more about interest deductions you can still make today. Read on and learn everything you need to know about mortgage interest relief in Ireland.
What is Mortgage Interest Relief?
Mortgage Interest Relief is an annual tax relief which can be obtained on the amount of interest paid on:
- Qualifying mortgage loans
- Loans are used to improve, purchase or repair a home.
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Which mortgage loans qualified for Mortgage Interest Relief?
To have qualified for the mortgage interest relief scheme, the loan must be for a principal private residence. It can be a new mortgage or loan used for the following purposes:
- Developing or improving the residence (top-up mortgages).
- Loans are separate from a mortgage which aim to develop or improve the residence.
- To remortgage the principal residence.
- Consolidation of existing loans.
Examples of developing or improving your primary residence include but are not limited to the following:
- Upgrading insulation and windows
- Installing alarms.
How does mortgage interest relief work?
Tax relief can be claimed back directly through the TRS scheme. The credit is then either applied against your monthly payments or added as a credit to your mortgage account.
If you applied for Mortgage Interest Relief against a loan instead of a mortgage, you will need to go through your local Revenue Office. The relief received will then either be provided as tax credits or returned at the end of the tax year.
What is the TRS scheme?The TRS Scheme is also known as the Tax Relief at Source scheme. The scheme allows mortgage holders to apply online for Mortgage Interest Relief to be directly applied to their mortgage, rather than having to wait until the end of the tax year.
Who can claim mortgage interest relief?
In Ireland, Mortgage Interest Relief can be claimed if, between 2004-2012 (inclusive), a mortgage or loan was taken out to improve, repair, or purchase a house which is or was your primary residence.
Special cases include loans made for the above reason against the home of a previous spouse or civil partner or for the home of a dependent relative.
When does the mortgage interest relief scheme end?
Applications for the scheme stopped in December 2020. If you didn’t apply before this date, you are unfortunately no longer eligible for the mortgage interest relief scheme.
However, homeowners who are renting their property may want to explore our mortgage interest tax deduction section to learn more about these potential savings.
Did you know? Under certain circumstances, some people qualified for mortgage relief for loans taken out between 2013-2020.
How to Claim Mortgage Interest Relief?
The relief can only be claimed through Revenue’s online form.
You will need to have your PPSN (Personal Public Service Number) and the details of all previous loans for the property to hand.
For joint borrowings, separate applications must be submitted, except for in the case of married couples or civil partners, who can submit one joint application. If granted, you do not need to renew the relief, as it will be automatically renewed each year.
Can I Receive Interest Relief if I Move Homes?
Should you decide to move homes, you must notify Revenue as soon as possible. If you were able to transfer your mortgage to the new property, you may still be able to benefit from the mortgage interest relief.
If you are no longer living in the property (e.g. renting it out), intended to live in the property but never did, or use the loan to finance non-related expenses such as purchasing a car, you no longer qualify.
Failure to notify Revenue of any change in circumstances could result in fines or penalties. You can notify Revenue through the TRS4 form, by completing it and sending it to the address on the form.
Can I Deduct Mortgage Interest for Rental Properties?
If you applied and qualified for the Mortgage Interest Relief Scheme, no, you cannot continue to receive the Scheme if you are renting your property. In fact, you need to advise Revenue of the change of situation as soon as possible to avoid any fines or penalties.
That said, if you are not benefitting from Revenue’s Mortgage Interest Relief Scheme, and you are renting a property, you may be able to deduct up to 75% of your mortgage interest paid.
Is there mortgage relief for the remaining 25% interest?
Yes! The Irish Government added this special provision to help with the housing crisis in the country. Below are all the details you need to know to take advantage of this tax break should you want to deduct 100% of your mortgage interest.
Renting to a qualified tenant
To qualify for the 25% extra deduction, you must be renting your property to a qualified tenant. The requirements for qualified tenants are as follows:
- Housing authorities deem the tenant a person who qualifies for social housing support.
- The tenant is entitled to a rent supplement provided by the Department of Social Protection.
Important! To qualify for the extra 25%, the property needs to be rented for a minimum three-year period. You will only be able to claim and receive the deduction once the 3 year period is over.
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