THOUSANDS of mortgage holders will have their mortgage interest relief suspended tomorrow in what is being seen as another budget blunder.
In his last budget, Finance Minister Brian Lenihan said the relief would apply to qualifying mortgages for the first seven years only.
However, it has emerged that many first-time buyers and all other mortgage holders will have the tax relief suspended by the Revenue tomorrow as it seeks to clarify who exactly is entitled to payments under the new budget measures.
For non-first time buyers, the relief is worth a maximum of €75 a month for married couples and €37.50 for single people.
Revenue said most first-time buyers would receive the relief as normal next month but some will lose the benefit. These include those who have moved house or re-mortgaged in the last seven years.
However, Ciaran Phelan of the Irish Brokers Association said: “We understand the Revenue are pulling the Tax Relief at Source on May 1 from the vast majority of mortgage holders, except for the very obvious first-time buyers, ie those who are still in their first home with the original mortgage lender. The relief is being suspended for all others. Those, for example, who are still within the first seven years of their mortgage but heeded good advice and shopped around for a better mortgage deal are in for a shock when their mortgage payment shoots up in the very month that their income will be slashed by increased taxes.
“Also those people who have topped up their mortgage in the first seven years will be axed for a period of time.”
Opposition parties and mortgage brokers said there is no guarantee the relief will be repaid in June when the Revenue review is due to be finished. Mr Phelan said although the Revenue said it will pay back any relief owed by June “this timeframe is purely indicative at this stage and given the number of accounts involved across all institutions this review may take longer to complete”.
Fine Gael deputy leader Richard Bruton said: “Brian Lenihan has presided over yet another botch as Finance Minister. It’s homeowners who will pay the price.”
But Finance Minister Brian Lenihan insisted that only a “very small number” of people would be affected, and took issue with the opposition comments.
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