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More than 225,500 homeowners will see an increase in their mortgages starting today if they had qualified for tax relief at source.
The mortgage interest relief was to be abolished entirely in 2017, but it was extended until the end of 2020.
The average annual mortgage relief for a couple of 250,000 euros is around 1,857 euros, according to the executive director of the Irish Mortgage Holders Organization, David Hall.
This means that some people might see their mortgage payments go up by € 150 a month or more.
The Finance Department confirmed to the Irish Mirror that based on current data the number of mortgage accounts that will no longer receive relief as of today is 225,532.
But it was always being phased out.
The lender granted the tax relief either by reducing the monthly mortgage payment or as a credit in a mortgage financing account.
A spokesperson for the Department said: “The relief has expired for mortgages taken out before 2004 and ceased for new loans as of January 2013.
“Therefore, residual mortgage interest relief is only available for eligible home loans taken out between 2004 and 2012 and has been phased out for the remaining beneficiaries on a phased basis to alleviate potential financial difficulties the ‘cliff’ was phased out in a single year.
“In 2019, 50% of the interest on a relevant loan qualified for relief, while for 2020 the amount was reduced to 25% and will cease as of January 1, 2021, as provided in the Finance Law of 2017 ”.
Hall said he hoped this was an oversight by the department given that thousands of people had lost their jobs during the pandemic and are unsure of their future.
And he said there should have been a reminder for the people who use it.
He said the decision should be reversed and was a nail in the coffin for already vulnerable families.
He said: “It is a nail in the coffin for those who are at the end of a horrible year dealing with their own health in a pandemic, with an uncertain future and now, to top it all off, they now face a further increase and charge. your mortgage.
“And this in circumstances where you don’t have a job and are unsure of the future will only put you in arrears faster and give you a higher amount to pay.”
The Finance department said the decision to abolish the Mortgage Interest Relief was motivated by the view that the relief is effectively set at the property’s purchase price.
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The spokesperson added: “ESRI’s research contends that demand-driven tax incentives that target home buyers, such as mortgage interest relief, are likely to result in higher house prices with a limited increase in the offer and therefore the buyer is unlikely to end up as a net beneficiary.
“Revenues have reported that the cost of the aid in 2019 was approximately € 60 million. The projected cost for 2020 is of the order of 35 million euros ”.
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