Tax relief for mortgage interest amounting to almost €1 billion has been taken out of homeowners’ pockets by the Government over the past three years, it has been reported.
The tax relief for mortgage interest provided to struggling homeowners – who were non first-time buyers – was reduced from 20% to 15% in the 2009 supplementary budget, and relief for mortgages over seven years old was abolished.
The Sunday Independent reports that the immediate result was that almost 250,000 people lost their tax relief on May 1, 2009.
The then Finance Minister Brian Lenihan said: “I believe this move is justified given the significant reduction in interest rates and in house prices.”
What he clearly had not anticipated was the complete crash of the property market.
According to figures released in Revenue’s statistical report for 2010, a massive €9bn was wiped off the combined income of working people in the year 2009, falling from a high of €91bn in 2008 to €82bn in 2009.
The same figures reveal there are 200,000 fewer people in the earnings table that year.
The reduction in tax relief for interest paid on home loans has also taken almost €1bn out of homeowners’ pockets and pushed many of them further down the road towards arrears.
Homeowners have suffered a staggering loss of €981m in tax relief over the past three years.
According to Revenue: “The reduction in figures can be attributed to a reduction in the number of people entitled to claim TRS (tax relief at source) and a reduction in rate (of relief) for non first-time buyers from 20% to 15%.”