We’re getting money back on our mortgage payments are we?
That very much depends on what – or who – you mean when you say “we”. In his budget last October, the Minister for Finance, Michael McGrath, rolled out a “targeted” relief measure which will save more than 200,000 homeowners up to €1,250 a year.
Who are the lucky 200,000?
It is actually marginally over 200,000 and “lucky” might be a bit of a stretch. The temporary relief – and it is available for one year only – will be on the table for people with loans of between €80,000 and €500,000 at the end of 2022. It will cover changes to their mortgage repayments over the course of 2023, to a ceiling of €1,250.
Can you make that a bit simpler for me?
The relief will be on the increased interest paid on a mortgage over the course of 2023 when it is compared to 2022.
Why are these people getting a break?
At the time he announced the one-time only measure, the Minister said he was introducing the relief as he was “acutely conscious” of the impact 10 successive interest rate increases imposed by the European Central Bank (ECB) had had on many households.
And that impact has been big, has it?
It has been massive for some people. Many homeowners – particularly those with tracker mortgages – have found themselves paying hundreds of euro more each month as a result of the decisions taken by the board of the ECB in Frankfurt.
And what about people on fixed rates or those who are about to come off fixed rates, will they get anything by way of relief?
The short answer is probably not. Thousands of people who have been on relatively short-term fixed rates will be coming off them this year and while they will find themselves paying substantially more as a result there will be no relief for them.
That’s harsh?
It is and they might feel doubly aggrieved because they have – typically – been paying much more for their home loans than tracker holders over the last decade or so and might well find themselves asking why the relief is being targeted at one cohort while another gets nothing.
So fixed rate holders get nothing?
Well, some will qualify for something. People who were on fixed rates might get something back if their fixed-rate term came to an end at some point last year and the level of interest paid over 2023 was higher than in 2022.
Okay, so, can you give me more details as to who can make a claim?
Well, you need the qualifying loan for starters and you will need to have paid more in interest in 2023 than you did in 2022. You will also have to have paid your Local Property Tax in full and be compliant with the planning laws.
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And how much will I get back?
It depends on how much more you paid in interest last year compared to 2022 although a cap applies. If you paid €6,250 more in interest than you will be able to claim back 20 per cent of that back which amounts to €1,250 – the limit of the relief available.
Can you break down some more of the numbers for me?
They do differ wildly but we’ll give it a whirl. If you owed just over €300,000 at the end of 2022 and were paying a rate of 2.5 per cent with the loan spread over 30 years you would have paid about €7,000 in interest. If your rate increased to 4 per cent in 2023, your repayments would have climbed to around €11,000m or €4,000 more. With relief of 20 per cent, you would get a refund of €800. If your repayments in 2023 were €2,000 more than they were in 2022 then you can expect to get back €400.
Can I share the relief with my partner if we are both paying the mortgage?
Yes, the credit can be split between a couple if they both paid similar amounts over the years in question.
How do I work out how much I might get back?
It should be pretty simple. There is a good chance you will be getting a mortgage interest statement from your lender covering last year in the post in the days ahead – if it has not already arrived. And you might also be able to lay your hands on the statement from last year as well. Those two pieces of paper will tell you everything you need to know. If you can’t find one or other of the statements you will need to contact your bank – they will be expecting your call.
And then what?
After you have recovered from the shock of seeing the difference in the interest paid in 2022 and 2023 in black and white you can file an income tax return with Revenue. You can do this through the Revenue’s MyAccount service.
And what exactly will I need to make the claim?
You will need the certificates of mortgage interest for 2022 and 2023 and a confirmation of mortgage balance at the end of December 2022. Anyone filing a Form 12 – the one applicable to PAYE workers should be able to upload the documents to MyAccount via the “Upload Supporting Documents” tab.
What about the self-employed?
They will most likely have to wait until later to make their claim – given the nature of the tax system but the process apart from that will be identical.
And will I have to wait long before the money hits my account?
The good news is no. The relief should be paid into your bank account – presuming Revenue has your bank details – in a matter of days after you have filed the necessary documentation. If the tax man doesn’t have your bank details, you will get a cheque in the post
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