mortgage interest relief

S

sooty

Registered User
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Am very confused about the tax credit for mortgage interest relief.....revenue website shows relief for married couple of E1200.00 but on my determination of tax credits it shows an amount of E280.40.....how is this figure calculated?

Thanks

Sooty.
 
It depends on the details of your mortgage.
Do you qualify for the FTB or non FTB rate of TRS?
How much is outstanding on your loan?
What term remains?
What rate is it at?

You can estimate the amount of interest payable using Karl Jeacle's mortgage calculator and then figure out how much interest qualifies for relief. €1,200 is the maximum possible credit for married non FTBs. If you pay less than €6,000 interest p.a. then your actual credit will be lower.
 
Yes, FTB but bought house in 1999. About 159K left to pay on loan......loan at 3% (staff rate of AIB)....pay BIK for that - about 25 years remain
 
OK - you qualify for the non FTB rate of relief so since you are outside the initial FTB 7 year period. In this case a maximum of €6K in interest qualifies for relief but according to your details it looks like you are actually paying less than €3K p.a. in interest so only that amount will qualify. Karl Jeacle's calculator suggests c. €2,661 in interest for this year given the details above which would mean €2,661 @ 20% = €532 p.a. I don't know where the €280.40 figure mentioned above comes from. Perhaps only one of you is qualifying for relief or something since this isn't too far off half the figure I came up with? Probably best to check with your lender and Revenue.
 
It shouldn't appear as a credit if you get it at source (TRS) which reduces your mortgage payment rather than increases your take home pay.
However if for some reason it doesn't fall under the TRS then it can appear as a credit (eg if you have an ordinary mortgage it may get TRS but if you had a separate loan for improvements which wasn't secured on the house, you would get this interest as a credit. Don't know if that's any help.
 
Good point! I didn't spot the bit about this appearing on the statement of tax credits and it would be unusual for this to be the case.
 
Sorry, I didn't read all properly.
In your case you get the 3% as TRS but the BIK you suffer because of the preferential rate is deemed interest paid also and this is given as a credit.
 
Thank you......had forgotten that I get relief directly as credit into bank account.......amount on Tax Credits Cert is obviously because of preferrentail rate......just on that point, would you reckon I would be better off going onto a commercial rate?
 
What do you mean by "commercial" rate? Do you actually mean retail rather than preferential employee rate?
 
Yes, sorry mean the retail rate........we call it the commercial rate in banking circles!
 
It really depends. Crunch the numbers at the retail rate and then factor in the lack of tax/PRSI on the BIK attributable to the preferantial loan rate and then compare the numbers to your existing situation I suppose?
 
Ok....thanks for your help...its really knowing that I am on 3% fixed indefinetely that makes the decision for me to leave it as it is.......its handy to know exactly how much I will pay each month as opposed to going onto variable and the rate changing every couple of months.

Cheers.:D
 
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