First Time Buyer Mortgage Interest Relief Deadline 31st December 2011

Squeaksoutloud

Can anyone offer me advice on the government & its plan to phase out Mortgage Interest Relief for the first time buyer. I have read the revenue webpage http://www.revenue.ie/en/tax/it/leaflets/tax-relief-source-mortgage-interest-relief.html And I understand that ‘Mortgages taken out from 1st January 2004 to 31st December 2011, subject to qualifying mortgage criteria, are eligible for mortgage interest relief until 31st December 2017.’ However the website states that ‘Mortgages taken out from 1st January 2012 to 31st December 2012 will be entitled to mortgage interest relief at the reduced rates of 15% for first time buyers and 10% for non first time buyers, on the first €3,000 interest paid per individual.’ So I am aware of the impending changes to the relief due in Budget 2012. For most people to qualify for the full first time buyer Mortgage Interest Relief it is necessary for them to ‘take out’ their mortgage prior to 31st December 2011. However we have a different situation and we are currently starting into a self build and hope to get construction started on site and get approval for a mortgage in the next few weeks. So just wondering what we have to do to qualify for the full First Time Buyer Mortgage interest Relief prior to end of 2011. As we are doing a self build mortgage payments from the bank will be done in stages. i.e. first drawdown possibly once the foundations are complete and certified. Do we need to make the first drawdown within 2011 to qualify for the full rate of First Time Buyer Mortgage interest Relief? Or are we deemed to have taken out the mortgage once approved? Cheers for any advice. The banks aren’t giving me any straight answer and I have emailed Revenue with the same queries. Can’t afford to miss out on this if possible!

Squeaksoutloud

Excuse the messy post..had to type in an email and then post it on my mobile!

Hill House

I'm in the same position and finding it impossible to get a straight answer, would be very grateful if someone could offer some help on this

Squeaksoutloud

Revenue got back to me with this:

'In order to qualify for the current rates for mortgage interest relief, you will need to pay interest in 2011. If you do not pay any interest until 2012, you will receive TRS at the reduced rate'

I am still waiting on them to get back to me on this:

'Say We were to make our first drawdown this year then would only that amount of the mortgage be eligible for the current rates of mortgage interest relief.

i.e. Say someone gets approved for a self build mortgage of €300,000. They then draw down €50,000 in 2011 once the foundations have been certified. Is it only the €50,000 that is eligible for the current rates of mortgage interest relief. As the rest of the mortgage amount of €250,000 is drawn down in 2012 will this get the reduced/revised rate of interest relief?'

Manachan

Quote "Revenue got back to me with this:

'In order to qualify for the current rates for mortgage interest relief, you will need to pay interest in 2011. If you do not pay any interest until 2012, you will receive TRS at the reduced rate'",


Hi,
I'm in a similar situation i.e. in the process of buying an in-complete house now. Waiting for contracts from seller and have been verbally approved by mortgage broker/bank.

Based on the statement from Revenue above, does this mean our first mortgage payment would have to be in 2011 (therefore mortgage would have to be taken out before end of November)?
Or, is it based on interest accrued in 2011? What do you think?

Squeaksoutloud

I havent heard anything back from Revenue yet for further clarification. I have got one piece of advice which contradicts other advice I have received...and no one has been able to offer advice on here yet!!

Anyway from what the bank told me you would have to take your mortgage out this year and also pay interest on it before the end of the year. I am not sure what that means...ie. how long after you get approved for mortgage or draw it down do you make your first payment?

I'll post up here if I do hear back from Revenue some day in the distant future maybe. Got back onto them about it just there.

Surprised there isnt more talk about this in general...ie all those interests encouraging first time buyers to purchase before the end of the year etc.

Manachan

Thanks for ur feedback. I will update if I get any feedback from revenue also. I mentioned it to my mortgage broker but he thought interest accrued in 2011 shud be enough but wasnt sure.
Cheers.

Squeaksoutloud

Got a response to my question above...

They said that based on the current legislation, the whole mortgage would be eligible for 2011 Mortgage interest relief rate for first time buyers.

So get building quick is the answer and if you drawdown mortgage this year you get full interest relief for the whole mortgage.

DrivesAlot

Squeaksoutloud wrote: »

Got a response to my question above...

They said that based on the current legislation, the whole mortgage would be eligible for 2011 Mortgage interest relief rate for first time buyers.

So get building quick is the answer and if you drawdown mortgage this year you get full interest relief for the whole mortgage.

Does that mean if you drawdown in 2011 and do not pay until 2012 you still qualify for full MIR?

Manachan

FYI: Thankfully, it's based on the drawdown date, not the date of the first mortgage re-payment. See response from Revenue.ie below:

the mortgage interest relief rate is based on the drawdown date and you would be entitled to trs at the rate applicable for 2011.

DrivesAlot

That sounds promising!! I think I will get onto Revenue also and get that in writing giving what our governement is capable of, I'd advise anyone in a similar position to do the same thing! Thanks for your reply!

Squeaksoutloud

Manachan wrote: »

FYI: Thankfully, it's based on the drawdown date, not the date of the first mortgage re-payment. See response from Revenue.ie below:

the mortgage interest relief rate is based on the drawdown date and you would be entitled to trs at the rate applicable for 2011.

Are you serious! They told me it would be based on actually paying interest in 2011. i.e. start drawing down mortgage now and pay your interest in December in order to qualify for this years rates.

I am in 2 minds on whether to press ahead and get started this year. All this conflicting information is confusing me and I keep thinking I wont make the deadline and push my start date for the build out to Spring.

Might be worth trying to start drawing down the mortgage this year just in case.

Did revenue tell you this? Does it mean if I draw down in 2011 but dont pay anything until next year we game ball for this years rates?

Manachan

FYI: See most recent response from Revenue below. Note: Response came from trsadmin@revenue.ie

I am replying to your recent e-mail regarding Mortgage Interest Relief and, in particular, the changes to the current rate.
Section 244(1A)(b)(i) Taxes Consolidation Act 1997 (as amended by the Finance Act of 2009 and 2010) states -
(i) for the year of assessment 2010 and subsequent years of assessment up to and including the year of assessment 2017 in respect of qualifying interest paid in respect of a qualifying loan taken out on or after 1 January 2004 and on or before 31 December 2011........
It is on the basis of this current legislation that Revenue determined that, in your case, the mortgage interest relief rate is based on the drawdown date and you would be entitled to trs at the rate applicable for 2011.
I trust this clarifies the position.


Yours sincerely,


It might be worth you sending them an email also to see if you receive similar confirmation. I emailed my question to:trsadmin@revenue.ie and followed up with a phone call.

FYI: My original question to revenue was:
I am currently finalising a purchase of a property. I am buying it with my partner, we are first time buyers, currently un-married.

I just want to ensure i qualify for the mortgage interest relief (currently 25% (2 yrs), 22.5% (3 yrs) and 20% (2 yrs)) up until 31-Dec-2017 (based on information i found on your website). My original understanding was the purchase of the property had to go through before 31-Dec-2011 to qualify.

My question:
- If the mortgage is drawn in 2011 and interest is accrued, but the first direct debit payment for this interest payment is not made until 2012. (paying interest accrued in 2011), is the mortgage holder entitled to tax relief. TRS
- OR, can the mortgage holder make the interest payment (based on the interest accrued at that point) before year end and therefore comply with the first interest payment in 2011.

Hope this helps.

Squeaksoutloud

Interesting wat they said to you. As I posted above they got back to me with a completely different response. Think I will just push ahead and draw down a small amount of mortgage money before end of year if I can manage it.

This is what I posted above:

[/QUOTE]
'In order to qualify for the current rates for mortgage interest relief, you will need to pay interest in 2011. If you do not pay any interest until 2012, you will receive TRS at the reduced rate'[/QUOTE]

Squeaksoutloud

Spoke to Revenue again this morning.If you are buying a house before year end then drawdown of full mortgage will get you this years rates as Manachan has stated above.but they don't know the situation for someone only drawing down the first stage of a stage payment mortgage which is my case for self build.terrible really as the uncertainty is causing me no end of hassle and stress.