Irish First Time Buyers Given Increased Tax Relief

by Jason Gorringe, Tax-News.com, London

07 January 2009

The Irish Revenue Commission has announced changes to tax relief payments to those with mortgages or loans. The new legislation, effective since January 1 2009, will aid first-time buyers while those who have owned their homes for more than seven years stand to lose out.

The Tax Relief at Source (TRS) scheme reduces the amount of tax paid on interest on mortgages or loans. On January 1, the rate of tax relief for first time buyers increased from 20% to 25% in years one and two of the mortgage and to 22.5% in years three, four and five. This change will benefit first-time buyers who purchased since January 1, 2005. The rate for years six and seven will remain at 20%. First time buyer relief ends after year seven. The relief for non-first time buyers will be reduced from 20% to 15%.

Anyone who registered for Tax Relief at Source as a First Time Buyer (FTB) in 2005 will benefit from the recent budget changes to the TRS relief rates as 2009 will be their fifth year in the scheme. As a result they will receive relief at the rate of 22.5% for year five of FTB status, and 20% for their final two years.

Any current FTB who has been in the scheme since 2004 or 2003 and is therefore entering their sixth or seventh year as an FTB will neither gain nor lose as they will continue to enjoy the tax relief rate of 20% (as they do now) for their final years as FTBs.

Non-First time buyers and those current first time buyers who are now in their seventh year of this status now receive relief at the reduced rate of 15%.

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