Mortgage interest for first-time buyers is being all but abolished from 2012, according to the director of the Irish Mortgage Corporation Frank Conway. He said however first-time buyers who buy this year will still manage to qualify for the maximum amount.
Mortgage interest relief is a special scheme in which mortgage holders receive back a proportion of the interest they pay on their mortgages. The special tax deal is managed through what is known as Tax Relief at Source (TRS), first-time buyers are the biggest beneficiaries where up to €416.67 is repaid directly back to mortgage holders bank accounts each month.
Tax relief is available up to seven years after taking out a mortgage.
The maximum qualifying interest amount for a first- time couple is €20,000. In year one and year two of purchasing, the maximum interest relief is 25% or €5,000 annually. This reduces to €4,500 in years three, four and five and to €4,000 in years six and seven.
“2011 is the last year in which first-time buyers can avail of the maximum relief of €416.67 per month. From 2012, all first-time buyers will move to the standard rate of mortgage interest relief, which has a monthly maximum value of just €75,” said Mr Conway.
It means that a first-time buyer who purchases a home up to and including the 31 December 2011 will be in line to qualify for up to a massive €31,500 over a seven-year period.
However, a first-time buyer who completes their mortgage and home purchase just one day later, on January 1, 2012 will receive a maximum benefit of just €6,300.
“First-time buyers who complete their purchase in 2011 will be up to €25,000 better off than first-time buyers who complete their purchase from January 1, 2012, onwards,” said Mr Conway.