Wednesday, March 13, 2013

Who benefits from Mortgage Interest Relief?

The Statistical Report of the Revenue Commissioners has a chapter on Income Distribution Statistics.  Within that Table IDS15 gives some details on the relief given for interest paid on home loans – Mortgage Interest Relief (MIR).  Here are the totals from that table.

Mortgage Interest Relief Distribution

The total amount of MIR allowed in 2010 was just under €280 million, with an average relief of €850 given to the 328,000 or so recipients.  The amount has fallen in recent years and was as high as €700 million in 2008 when the ECB rate peaked at 4.25%.  It has since fallen to 0.75%.

The final column shows that the amount of relief granted generally increases with income and the highest average going to those with an income over €275,000.  Although there are limits to the amount of relief that can be claimed, it is clearly a function of the size of the loan.   Those on higher incomes, on average, have bigger loans.

Around €20.5 million of relief is granted to Income Tax cases with an income over €100,000, though issues of jointly-assessed Income Tax returns, separately-assessed married couples and the tax case to which the relief deter definitive judgements.

It can be noted that at €279 million the amount of relief granted is less than the amount expected to the collected by the Local Property Tax this year (€250 million), and that even next year, when the full rate applies, the average MIR of €850 will be in excess of the property tax bill that these mortgaged home-owners will face.  MIR is due to be phased out by 2017.

1 comment:

  1. Mortgage interest relief is administered via Tax Relief at Source (TRS). This means that your mortgage lender gives you the benefit of tax relief on the amount of mortgage interest paid. The lender does this by reducing your mortgage repayment by the amount of tax relief you are entitled to in each tax year. Any amendments to this tax relief - for example, if there is a change in interest rates - are made automatically by your lender. Tulsa mortgage