Dáil Question to the Minister for Finance

15/11/2012

To ask the Minister for Finance if he will outline the benefits to extending the current rate of mortgage interest relief for first time buyers; the projected cost of extending the scheme to the Exchequer, and his rationale for the possible cessation of the scheme in 2013; and if he will make a statement on the matter.

Reply:

If mortgage interest relief was extended to allow for loans taken out in 2013 by first-time buyers to qualify for mortgage interest relief at the current rates of relief and interest ceiling applicable to first-time buyers, and assuming that the interest payments would reach the interest ceilings available to first-time buyers, the maximum benefit to such buyers would be as follows:

Single Individuals
Year
First Time Buyer Interest Ceiling
Rate of Mortgage Interest Relief
Maximum Relief Due
2013
€10,000
25%
€2,500
2014
€10,000
25%
€2,500
2015
€10,000
22.5%
€2,250
2016
€10,000
22.5%
€2,250
2017
€10,000
22.5%
€2,250
                    Married Couples

Year
First Time Buyer Interest Ceiling
Rate of Mortgage Interest Relief
Maximum Relief Due
2013
€20,000
25%
€5,000
2014
€20,000
25%
€5,000
2015
€20,000
22.5%
€4,500
2016
€20,000
22.5%
€4,500
2017
€20,000
22.5%
€4,500

If it is assumed that any extension of mortgage interest relief to new borrowers in 2013 would include both first-time and non first-time buyers in that year, I am informed by the Revenue Commissioners that the full year cost to the Exchequer of an extension on that basis, assuming current rates, is estimated to be of the order of €5 million.

It is also tentatively estimated that two thirds of this cost would relate to first time buyers.

It should be noted that, the position is, as I stated in my Budget day speech on 6 December 2011, and on many occasions in this House since, that mortgage interest relief for principal private residences will no longer be available to house purchasers who purchase after the end of 2012 and will be fully abolished from 2018. This means that a loan will have to be drawn down on or before 31 December 2012 in order to qualify for this relief. I have no plans to review this decision and I believe that more than adequate notice of this decision has been provided.

As you will appreciate, I receive numerous requests for the introduction of new tax reliefs and the extension of existing ones. You will also appreciate that I must be mindful of the public finances and the many demands on the Exchequer given the current significant budgetary constraints. Tax reliefs, no matter how worthwhile in themselves, reduce the tax base and make general reform of the tax system that much more difficult.