First time buyers are set to lose over €30K if they purchase a property after June of this year when mortgage interest relief (MIR) for people buying their first home is to be abolished.
Currently mortgage interest relief is available to first time buyers for up to 7 years after they buy their property. Over a 7 year period a qualifying first time buyer couple availing of this generous relief could save over €30K
The changes to mortgage interest relief, also known as Tax Relief at Source (TRS) are outlined in the Programme of Government. The new measures include an increase in TRS for people who bought properties between 2004 and 2008.
Angela Keegan, Managing Director of MyHome.ie, believes many first time buyers are unaware of the full implications of the June deadline and says the new measures should be delayed until next year when the relief was due to be phased out on a gradual basis.
‘Buying a house is the biggest and most important financial transaction people make. Introducing drastic changes like this at such short notice is particularly unfair to first time buyers who have already been hit by a range of measures such as changes to stamp duty, more expensive mortgages and the unavailability of ECB tracker and fixed rate mortgages’ Keegan said.
Keegan also pointed out that it was also bad news for the property market as a whole. ‘First time buyers were the one bright light in the property market in 2010 and so far that trend looks set to continue in 2011. Taking away this relief in such an abrupt fashion will hit those buyers as well as the property market and as a consequence the State’s coffers. Neither of the three can afford this measure’ she said.