The Minister for Finance, Brian Lenihan, this afternoon announced a number of measures that affect home buyers in the special Supplementary Budget. The most significant announcement from the Minister is that mortgage interest relief will be discontinued for any mortgage over 7 years from May 1st. The Minister indicated that the Government intends to abolish mortgage interest relief entirely in the future.
Mr. Lenihan also announced that a new stamp duty trade-in scheme will be introduced under which no stamp duty is payable by someone who accepts a traded-in property in exchange or part exchange for a new house or apartment. He also announced that rental interest relief is to be reduced from 100% to 75%. The full text of the relevant excerpts of the Ministers speech are given below.
Excerpts from Budget speech of Minister for Finance:
- Mortgage Interest Relief
- Stamp Duty “Trade-in” scheme
- Restriction in Interest Relief Rented Residential Property
- Income and losses from dealing in residential development land
Mortgage Interest Relief
Mortgage interest relief will be discontinued for any mortgage over 7 years from 1 May.
Stamp Duty “Trade-in” scheme
Establishment of a Stamp Duty “trade-in” scheme, under which no stamp duty is payable by a person who accepts a traded-in property in exchange or part exchange for a new house/apartment. Stamp Duty will apply when the person subsequently sells on the ‘swapped’/traded-in house. Full details will appear in the Finance Bill.
Restriction in Interest Relief Rented Residential Property
The level at which interest re-payments can be claimed against tax for residential rental properties is being reduced from the existing 100% to 75%. This measure will apply to both new and existing mortgages. Commercial properties are not affected.
- The special 20% rate applied to the trading profits from dealing in or developing residential development land is being abolished. The income will be charged at the person’s relevant marginal rates of income tax or the 25% rate of corporation tax. This change will apply as regards Income Tax for the year of assessment 2009 and subsequent years and as regards Corporation Tax for accounting periods ending on or after 1 January 2009 (with accounting periods straddling that date being deemed for this purpose to be separate accounting periods).
- Where trading losses have been incurred from dealing in or developing residential development land in circumstances where, if trading profits had been made, they would have been eligible to be taxed at 20%, and a claim to use those losses has not been made to and received by the Revenue Commissioners before 7 April 2009, the losses from today will generally only be relievable (on a value basis) up to a maximum of 20%. Where any such loss is a terminal loss, the restriction will be implemented by “ring-fencing” the loss.
Full details of both changes will be contained in the Finance Bill.
For full budget details visit the Budget Section of the Department of Finance website.