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Tax Relief For Mortgage Interest Paid On A Home Loan

Revenue have just published a useful guide on mortgage interest relief

The key points are:

  1. Tax relief for mortgage interest on a home loan is tax relief given to mortgage holders based on the interest paid on a qualifying mortgage on your home.
  2. This includes a new mortgage for a home, a top up loan used for the purposes of developing or improving your home, a separate home improvement loan, a re-mortgage or consolidation of existing qualifying loans secured on the deeds of your home.
  3. The mortgage interest relief is given at source, by your mortgage provider, either in the form of a reduced monthly mortgage payment or a credit to your funding account.
  4. You do not have to be earning a taxable income to qualify for mortgage interest relief.
  5. You can also claim tax relief in respect of the interest on a mortgage paid by you for your separated/divorced spouse or former partner in a dissolved civil partnership.
  6. You can also claim tax relief in respect of a dependant relative for whom you are claiming a dependant relative tax credit (i.e. widowed parent or a parent who is a surviving civil partner or elderly relative).
  7. Switching lender or mortgage type to achieve a better interest rate is not the same as taking out a new loan. However, a new mortgage when you move home and take out a mortgage with a new or existing lender is eligible for relief.
  8. A mortgage taken out from 1st January 2004 to 31st December 2012 used to purchase, repair, develop or improve your sole or main residence, situated in the state, is eligible for mortgage interest relief until 31st December 2017.
  9. Mortgages taken out after 31st December 2012 will not qualify for mortgage interest relief.
  10. Mortgages taken out prior to 1st January 2004 are no longer eligible for mortgage interest relief.
  11. Top up loans / equity release loans taken out since 1st January 2004 on these pre-2004 loans may be eligible for mortgage interest relief provided they are used to purchase, repair, develop or improve your sole or main residence situated in the state.
  12. From 1st January 2012 the rate of mortgage interest relief for first time buyers who took out their first mortgage between the years 2004 and 2008 and are residing in the property increased to 30% until 2017.
  13. If you took out a loan outside those dates the existing rules remain unchanged.
  14. Mortgage interest on loans taken out for investment, rental, secondary or any properties other than your main residence does not qualify for interest relief.
  15. If you are living in the state and paying a mortgage to a qualifying lender in the state but working in Northern Ireland, you can still claim mortgage interest relief in this country provided you have a PPS number.
  16. Other loans such as loans in sterling (UK currency) are not eligible for relief through the Tax Relief at Source Scheme but may be eligible for relief from your local tax office.
  17. Where a parent is a co-mortgagor/guarantor and is not living in the mortgaged property or making any repayments on the mortgage, the person’s eligibility for Mortgage Interest Relief at the rate applicable to the first time buyer is not affected by the fact that a parent is also party to the mortgage deed.
  18. Home loans taken out in 2013 or later do not qualify for mortgage interest relief.

Stamp Duty Changes

Introduction

Finance Act 2012 introduced a number of important changes to the stamp duty filing regime.

The changes apply to all instruments or deeds executed on or after 7th July 2012.

Key Changes in Stamp Duty Filing Regime

Where the execution date of an instrument or deed is on or after 7th July 2012:

  1. Adjudication of the stamp duty liability will not be necessary or possible.
  2. A late filing surcharge (5% or 10%) will apply where returns are filed late.
  3. There are new criteria for making a valid “expression of doubt.”

What these changes mean

  1. Instruments executed on or after 7th July 2012 will no longer be subject to adjudication.
  2. Stamp duty must be self-assessed in all such cases.
  3. Where unclear about the stamp duty treatment of a particular matter in the return then there is an option to make “an expression of doubt” on the ROS form.
  4. The criteria for making a valid expression of doubt are stricter.
  5. Revenue can reject an expression of doubt as not being genuine.
  6. If Revenue believes the expression of doubt is not genuine, they will issue a notice of rejection outlining the reasons.
  7. To obtain a Stamp Certificate the filer must immediately lodge an amended return and pay the related liability.
  8. The taxpayer will have the right to appeal to the Appeals Commissioner.
  9. An expression of doubt will not be accepted where the Stamp Duty Return is filed late.
  10. It is also possible to address technical tax queries to Revenue’s Technical Service (RTS).
  11. Late Returns will be subject to a surcharge.
  12. Revenue will continue to accept returns as being filed on time where filed up to forty four days after execution. (This is a Revenue Concession.)
  13. A 5% or 10% surcharge will apply depending on the lateness of the Return. Further information is available on [http://www.revenue.ie/en/tax/stamp-duty/index.html].

Working in Ireland – Part 1

Introduction

Your residency affects your tax treatment in Ireland.

As an Irish resident, ordinarily resident and Irish domiciled individual you will be taxed on your worldwide income wherever it arises.

You will be taxed on all Irish and foreign source income in full and where possible you will be entitled to a tax credit for any foreign tax paid on foreign source income.

Residence

You will be considered to be Irish resident if you are present in the state for:

a) 183 days during the tax year in question or

b) 280 days or more over a period of two consecutive tax years.

Notwithstanding b), if you are present in Ireland for 30 days or less in a tax year you will not be treated as resident for that year unless you elect to be resident.

If you are not tax resident in the year of arrival under the above rules, you may elect to be tax resident for the year of arrival.

If you have any queries relating to whether or not you should elect to become Irish resident, please contact us on 01 872 8561

Ordinarily Resident

You will be considered ordinarily resident if you have been resident in the state for the previous three consecutive years.

Regardless of whether or not you are actually resident in the state in the fourth year, you will be considered ordinarily resident for the fourth year.

If you leave Ireland, you will cease to be ordinarily resident when you have been non resident for three consecutive years. You will not be considered to be ordinarily resident from the fourth year.

Domicile

Domicile is a general legal concept.

It is relevant to you in relation to how certain foreign source income will be taxed in Ireland.

Under Irish law, every person acquires a domicile of origin at birth. In most cases this is the father’s domicile, however, in situations where the parents are unmarried or the father has died prior to the individual’s birth, the domicile of the mother is taken.

Your domicile can change if you acquire a domicile of choice.

For more information, please contact us on 01 872 8561

Tax Treatment

As a non resident, but ordinarily resident and Irish domiciled individual you will be taxed on all Irish and foreign sourced income in full.

The following income is exempt:

a) Income from a trade or profession, all duties of which are exercised outside Ireland.

b) Income from an office or employment, all duties of which are performed outside the state.

c) Foreign income providing it does not exceed a threshold amount of €3,810 in a tax year.

As a non resident, non Irish domiciled but ordinarily resident individual, you will be taxed on all Irish source income in full and foreign source income to the extent that it has been remitted into Ireland.

Again, the following income is exempt:

a) Income from a trade or profession, all duties of which are exercised outside Ireland.

b) Income from an office or employment, all duties of which are performed outside the state.

c) Foreign income providing it does not exceed a threshold amount of €3,810 in a tax year.

As non resident, non domiciled and non ordinarily resident, you will be taxed on Irish source income in full and on foreign source income in respect of a trade, profession, employment or office where the duties are exercised in Ireland.

As an Irish resident and ordinarily resident but non Irish domiciled individual, you will be taxed on Irish source income in full and on remittances of foreign source income.

Should you have any queries in relation to residency, ordinary residency or domicile, we would be delighted to discuss them with you.