Mortgage holders expecting to benefit from additional mortgage interest relief, introduced in December’s Budget, could have to wait up to four months for the changes to come into effect, it has been revealed.
The Budget introduced a new 30% rate of mortgage interest relief for first-time buyers who took out mortgages between 2004 and 2008, in a bid to help families with the biggest mortgages keep on top of their monthly repayments.
The move was widely welcomed at the time – but mortgage holders expecting their monthly repayments to be reduced this month were disappointed to see that their repayments had not fallen by up to €125 per month, as was to be expected.
This is because the new rate of relief – which is usually deducted at source – may not be formally adopted into law until mid-April, even though the relief was intended to act from January 1.
The delay came to light after confused borrowers queried the delay with their lenders and were told that the Revenue Commissioners had formally notified the lenders about the new regime.
TheJournal.ie reports that The Department of Finance has confirmed the new system will not be adopted into law for months, as it will only be contained in the Finance Bill, which may not be adopted into law until April.
The extra interest relief will be applied retrospectively – so mortgage holders can expect a small refund in April or May after it kicks in, but will have to put up with higher payments in the meantime, something that is sure to throw household budgets off course.
The Finance Bill – which provides legal effect to many of the Budget measures – is set to be published in early February, but will take several weeks to pass through the Dáil and Seanad before it is formally enacted.
This is unlike the Budget’s financial resolutions – which are voted on by TDs on the night the Budget is presented – and the Social Welfare Bill, which changes social welfare provisions and is adopted before the Christmas recess each year.
The Oireachtas is not required to formally pass the Finance Bill until four months after the Budget is delivered – meaning it may not be passed until early April, after which President Higgins may have up to a week to sign it into law.
Last year’s Finance Bill was rushed through the Oireachtas by the end of January, in order to allow the Dáil be dissolved and an early general election to be held.
A PDF booklet explaining the changes to mortgage interest relief under the Budget can be found on the Department of Finance site.