More than 180,000 homeowners have failed to claim up to €1,250 in tax relief that was designed to soften the blow of rising mortgage interest rates. As a group, they could be missing out on as much as €120 million.
In October 2023 the then minister for finance Michael McGrath introduced a temporary once-off mortgage interest relief tax credit that was targeted at homeowners who had been hit with six interest rate hikes from the European Central Bank (ECB) in 2023 which had left many paying more than €4,000 a year more in loan repayments by the end of the year 2023 when compared with 2022.
At the time, the minister suggested the relief would benefit as many as 208,000 people, with tracker mortgage holders, those on standard variable rates and people whose loans were taken over by so-called vulture funds the beneficiaries.
Tracker holders – of whom there are about 180,000 were the cohort who saw the cost of their home loans climb fastest with the rates they pay always moving in tandem with the rates offered by the ECB.
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While the budget move was broadly welcomed when it was announced more than a year ago people have been very slow to take advantage of it. By the end of last month, just 26,859 people had sought a tax refund from Revenue.
That amounts to around 12 per cent of those who the Department of Finance expected would qualify. In June, the number of borrowers who had claimed the relief was just under 23,000, suggesting that the rate at which claims are being lodged has fallen sharply since the summer.
According to figures from Revenue, those who have applied for the credit have received rebates of just over €18 million in total, which amounts to €670 per borrower. If the remaining 181,000 people understood to be eligible were to make claims at the same level, the amount they would get back would top €120 million.
The figures may change in light of returns from self-assessed taxpayers. Information in relation to claims made by self-assessed taxpayers is not yet available. Those taxpayers had to submit 2023 returns by the end of last month – or by November 14th for those submitting returns online.
A recent survey by Taxback.com found that 700 of 1,400 respondents had never heard of the mortgage tax credit, suggesting that a lack of knowledge might be at least partially responsible for the low take-up of the rebate.
There has also been criticism from some quarters that making a claim is overly complex, with claimants having to file a tax return with Revenue, a process with which most PAYE workers are unfamiliar.
The credit is available to taxpayers in respect of their family home, where the outstanding mortgage balance was between €80,000 and €500,000 on December 31st, 2022. It is paid at a rate of 20 per cent of the increase in the homeowner’s interest bill in 2023 over 2022, up to a maximum of €1,250.
While it was originally billed as a one-off cost-of-living measure, it has since been extended to include to include this year – again measuring this year’s mortgage interest bill against the 2022 figure – in last month’s budget.
Taxback.com says the mortgage interest relief is not the only tax credit that people are leaving behind. While about 400,000 renters are eligible for the rent tax credit, fewer than 100,000 claimed it last year.
For the 88 per cent of homeowners who stand to benefit from the tax relief but have yet to apply – and the renters who have still to claim their credit – there is still time to make a claim for 2023, with the limit on claiming tax refunds for both PAYE and self-assessed people set at four years.
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