Mortgage holders in for shock on Friday
Wednesday, April 29 11:38:07
Most mortgage holders are in for a shock, as even those who are within the seven-year window will have their mortgage tax relief cancelled on Friday.
That's according to Ciaran Phelan of the Irish Brokers Association, who said that Minister Lenihan in his Budget three week's ago said that all qualifying mortgages will receive Tax Relief at Source (TRS) for the first seven years of the mortgage only.
However, "due to the Government's haste", many first time buyers and other struggling mortgage holders who are still within the 7 year window, will have their tax relief cancelled on Friday, said Mr Phelan.
"We understand that the Revenue are pulling the Tax Relief at Source on 1st May from the vast majority of mortgage holders, except for the very obvious first time buyers i.e. those who are still in their first home with the original mortgage lender. The relief is being suspended for all others. Those for example, who are still within the first 7 years of their mortgage, but heeded good advice and shopped around for a better mortgage deal are in for a shock when their mortgage payment shoots up in the very month that their income will be slashed by increased taxes. Also those people who have topped-up their mortgage in the first 7 years will be axed for a period of time," he said.
Revenue had said that first-time buyers, who have not moved house or re-mortgaged or re-financed will continue to receive tax relief at source in the usual way.
All borrowers currently receiving TRS are having their relief suspended immediately, pending a review of their entitlements by the Revenue under the amended TRS scheme.
However while the Revenue say that they are "committed to carrying out a review of all affected accounts and will at a later date, reinstate TRS on all accounts that continue to qualify for relief".
They 'aspire' to have this completed by June 09 but say 'this timeframe is purely indicative at this stage and given the number of accounts involved across all institutions this review may take longer to complete'.
"Our concern is that many people's financial situation has already come under serious strain over the last 12months. Some of these mortgage holders that will be affected are stuck on fixed rates and haven't even got the benefit of the recent rate reductions," said Mr Phelan.
"The onus will now fall to each household to ensure that the Revenue commissioners reinstate their TRS at sometime in the future. Brokers throughout the country are standing by to give assistance to all mortgage holders to ensure that they are claiming and receiving the correct amount of tax relief. As this is imminent, people who pay the net amount into their mortgage account will clearly have a shortfall. Their mortgage direct debt could bounce or the lack of funds may impact other finance payments and this could affect their credit rating. It is imperative that people are aware of this and act accordingly."