Taking out a House Mortgage

A deadline is approaching!

Act quickly to avail of important tax relief on buying a new home

For those people considering buying a house there is an important tax break which has only months left to run and which could be too valuable to let pass.

Most people buying or building a property use a mortgage loan to help them finance part of the purchase price. A mortgage like any other loan involves repaying the lender the amount borrowed plus interest. The state gives some assistance to people who are trying to repay this home-loan interest in the form of mortgage interest relief. The relief operates in the form of a refund from the mortgage lender of part of the mortgage interest paid every month. This refund will apply on a sliding scale of rates until the end of the year 2017 when it will be discontinued. Once you have qualified for the relief the good news is that you will continue to get it until the end of 2017.

An example will show how this works in practice:-

A married couple, who are first time buyers draw down a mortgage of €150,000 in December 2012 to buy their main residence. In their first full year of monthly repayments they will pay approximately €5,680 in interest on the mortgage over the full year. If they claim the mortgage interest relief they will get a refund of 25% of this interest back from their mortgage lender. This is almost €1,420 of a refund which works out at just over €118 per month coming back into their bank account.

More details on this relief including information on the maximum interest amounts that qualify together with the rates of relief are available from the Revenue website www.revenue.ie

Time is running out to avail of this mortgage interest relief in that mortgages taken out after 31st December 2012 will not qualify for this valuable relief. The key point here is that in order to beat the 31^st December deadline and avail of this relief the mortgage needs to be drawn down i.e. the money spent to buy or build the house in question. If you are considering purchasing a house you should start the ball rolling on the transaction early and ensure that you involve your solicitor early in the process. This will ensure that any hiccups or roadblocks along the way can be dealt with in plenty of time before the deadline.

If you are considering buying or building a new home and you require the services of an efficient and thorough solicitor then contact us.