Mortgage Interest Tax Relief For First Time House Buyers

First time house buyers can claim tax relief on their house mortgage interest repayments for the first seven years of their mortgage term.

The tax relief available is provided on a reducing scale. For the first two years of their mortgage repayments, first time buyers can claim tax relief of 25 percent per year.

For the next three years, that is the third, fourth and fifth years of the mortgage, first time buyers are entitled to tax relief at a rate of 22.5 percent per year.

In the final two years of the seven year period, first time buyers are allowed a rate of 20 percent a year.

In January 2009, the amount of interest that is allowed on a mortgage was increased to 20,000 euro for a married couple and 16,000 euro for a single person.

Non first time buyers are allowed tax relief on mortgage interest repayments at a rate of 15 percent per year. This relief period also ends after seven years.

Home mortgage tax relief is given at source (TRS), Mortgage interest relief is given, by your lender, either in the form of a reduced mortgage payment or a credit to your funding account.

A qualifying loan for the purpose of mortgage tax relief is a secured loan, used to purchase, repair, develop or improve your sole or main residence. Mortgage tax relief can also be claimed in respect of the interest charged or paid on main residences or respect of mortgages paid for separated/divorced spouses, and dependent relatives for whom a dependent relative tax credit is being claimed.

Switching to a new mortgage lender or a different mortgage type to achieve a better interest rate is not treated as a new loan by the Revenue. However, moving home and taking out a new mortgage for this home with a new or existing lender is eligible for relief for 7 years from the date of first payment on the new home loan.

As a first-time buyer, it is important to be aware of the fact that a mortgage loan comes with a variety of associated charges and costs. Although currently first time buyers do not have to pay stamp duty, other charges involved include legal fees, buildings insurance, removal costs, land registry fees, lender’s valuation costs and survey fees.

There are two things to bear in mind when applying for a mortgage: what is the percentage of the house value you can receive as a mortgage, possibly up to 92 percent, and what earnings limit will the lender impose, a typical example being three and a half times your salary.

This article is only intended as a basic general summary and you should always seek professional advice where necessary.

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